Although still welcoming all kinds of foreign investment those involved in advanced technologies would be given a particularly warm reception, Chinese Vice Premier Wu Yi assured executives of multinationals attending a symposium on Thursday.

 

She told the business delegates that foreign investment had to serve the needs of China's industrial restructuring.

 

The Industry Guide for Foreign Investors is to undergo its third revision since 1997 in the expectation of channeling more investment into research and development centers, new high-tech industries, advanced manufacturing, energy conservation and environmentally friendly sectors, said Wu. She chaired a seminar at the symposium in Xiamen of east China's Fujian Province.

 

Investment helping to upgrade China's agriculture, service industries and traditional manufacturing would also be encouraged, she explained.

 

Although China had been the largest recipient of foreign investment among all developing nations for 15 successive years much remained to be done to improve both its quality and quantity, Wu observed.  

 

She cited a report given to the UN Conference on Trade and Development which noted in 2004 China attracted per capita foreign investment of US$47. This was much lower than the US$534 per person invested in developed countries and well below the world average of US$107.

 

Jin Bosheng, a research fellow with the Research Institute of the Ministry of Commerce, said China was showing particular interest in new high-tech industries especially electronics, biology, petrochemicals and medicines. Such changes clearly indicated the country was seeking to redirect foreign investment, he said.

 

Amid growing domestic concern that surging foreign trade wasn't bringing substantial benefit to people in central and western China the investment regulators are now focusing on upgrading industries in the poorer inland areas of the country.  

 

Assistant Minister of Commerce Yi Xiaozhun recently revealed a plan to encourage first-generation foreign investors whose businesses mainly focused on low value-added processing to move to the less developed interior. East coast business centers, the original frontier of China's new economy, could then refocus development on more lucrative high-tech industries.

 

Although that plan received an icy response from foreign investors China has revised a series of regulations on such investments. The latest revision involves a regulation due to come into effect on Friday which standardizes rules on acquisitions and mergers of Chinese companies by foreign investors.

 

After a number of foreign companies recently encountered difficulties acquiring Chinese businesses there's been speculation that consideration is being given to tightening foreign investment controls.

 

Vice director Guo Jingyi of the Law and Regulation Department of the Ministry of Commerce refuted the speculation and cited new rules which, for the first time, will allow share swapping between foreign and Chinese companies involved in mergers and acquisitions. "We've opened a new channel for foreign mergers and acquisitions," he said. In the past the most common form of foreign investment in China was factory building.

 

Justin Lin, director with the China Center for Economic Research of Peking University, said it was time China started to get picky with foreign investment. China's current policies of attracting such funds were agreed 27 years ago when the country was keen to access investors and foreign currencies.

 

"While China's foreign currency reserve surged to US$875.1 billion in March--the highest in the world--our priority now is not to attract as much foreign investment as possible but to bring in new high-tech industries which we currently don't have," he said. "I've no doubt that preferential policies will only remain for certain kinds of foreign investors," Lin added.

 

(Xinhua News Agency September 8, 2006)