The National Development and Reform Commission (NDRC) and the Ministry of Commerce jointly issued a new government foreign investment directory on November 30. It updates one issued in March 2002, and will go into effect from January 1.

The detailed directory consists of various sectors the central government is presently encouraging or discouraging, and experts said it is in line with the country's World Trade Organization (WTO) commitments.

The NDRC website www.ndrc.gov.cn released the news on Friday. A commission spokesperson said the update is aimed at attaining such goals as allowing China to obtain more sophisticated technologies.

For example, the government is encouraging foreign investors to channel capital and research into sectors like production of equipment used in improving the environment and manufacturing electronic devices for vehicles.

Meanwhile, the government is accelerating the opening-up of the service industry. Overseas investors will have a presence in sectors such as film and TV production for the first time.
 
As the most populous developing country, China enjoys comparative advantages in labor-intensive industries, which were encouraged in the newly updated directory.

Lin Yueqin, a researcher from the Chinese Academy of Social Sciences, said on Sunday that the changes described in the directory already give foreign investors nearly as many options as domestic investors.

"But I should say, local governments should pay more attention to the quality of foreign projects," said Lin, adding that decision-makers should have a clear idea as to whether projects are really necessary for locals.

China's opening-up, especially its WTO entry, has helped overseas investment flow into the country. Since 2002, China has absorbed actual foreign direct investment (FDI) worth more than US$50 billion a year. The amount of FDI attracted in the first 10 months of this year reached US$53.78 billion, already exceeding that for the whole of 2003.

But he blamed some local governments for paying less attention to the social and environmental impact overseas projects bring.

Zhang Jianyu, visiting scholar with Tsinghua University, told China Daily on Sunday that the directory itself cannot play the decisive role in attracting foreign investment.

"As China's economy increasingly becomes market-oriented, the market will have final say for foreign investment," said Zhang.

(China Daily December 13, 2004)