During the 11th Five-Year Development Guidelines (2006-2010) period the growth of foreign direct investment (FDI) may slow while investment overseas by China will continue to rise significantly. 

The estimate was released by Ms Jiang Xiaojuan, deputy director of the Research Office of the State Council, at the "Chinese Economists 50 Forum" held on February 11 in Beijing.

According to Ms. Jiang, during the 2006-2010 period, the average annual income will surpass US$2,000 and at the same time China would enter a new stage of international direct investment. The growth of FDI would slow and the net inflow of foreign capital also decline.

Ms Jiang said from 1991 to 1997 China's FDI held 12.3 percent of total domestic investment – much higher than many other countries and during the mid-1990s the country emerged as an FDI leader. In fact FDI reached a record high of around 13.3 percent in 1998. However, it had dropped to 8.2 percent in 2004. The figure for other developing countries was around 10.5 percent.

She pointed out that among the 16 developing countries with a population of more than 50 million, the FDI of China put it in 10th position.

According to the National Bureau of Statistics (NBS), the ratio of foreign capital in the national total fixed asset investment has dropped from 17.1 percent to 5.6 percent. The Balance of Payments Statement in 2005 from the State Administration of Foreign Exchange also shows that the foreign investment in 2005 had dropped to 6.1 from 16.33 percent in 1998.

Meanwhile, China's overseas investment continues to increase dramatically. The total amount in the year 2000 was around US$620 million but it rose sharply to US$6 billion in 2005.

Ms Jiang said that due to these various changes the net inflow of FDI would encounter a period of decline.

(China.org.cn by Wang Ke, February 16, 2006)