"More fields are opening to foreign investors and market regulations are becoming more transparent, which encourages foreign companies to increase their presence in China," said Sun Xiaohua, a senior researcher at the Chinese Academy of International Trade and Economic Co-operation.

His remark followed release of the latest statistics on foreign investment in China from the Ministry of Foreign Trade and Economic Co-operation (MOFTEC).

In the first 10 months, a total of 20,549 enterprises backed with foreign cash have been registered in China which represents a rise of 17.5 per cent year-on-year.

Contracted foreign investment rose by 26.85 per cent to US$55.2 billion, with actual foreign investment roaring to US$37.3 billion - up 18.63 per cent.

"With China close to becoming an official member of the WTO, foreign investment has significantly increased," said Sun.

After climbing to a historical high of US$45.5 billion in 1998, foreign investment in China has remained stagnant at about US$40 billion in the past two years.

"Now many profitable areas such as telecom and banking systems will gradually open, which may attract a large amount of foreign investment," said Sun.

The analyst attributed the fast and steady growth of the Chinese economy as an important factor in luring foreign investors reeling from a global economic slowdown to China.

More importantly, policies and administrative systems blocking trade and foreign investments will be phased out in the coming years.

According to Sun, many investments come from multinationals already operating in China and increased investment shows that they are less concerned about inconsistent policies.

Such policies and regional protectionism have been the subject of complaints by many foreign firms and economists, pinpointing them as barriers to their investment in China.

Capital market financing and enterprise mergers are expected to replace current direct investment, said Sun, who revealed MOFTEC is working out regulations encouraging foreign acquisitions in China.

(China Daily November 14, 2001)