Sources from the Beijing Foreign Trade and Economic Co-operation Committee revealed the decision is based on China's commitment to the World Trade Organization (WTO) to gradually open its service industry and Beijing's successful bid to host the 2008 Olympic Games.

"Key sectors involve real estate, commerce, tourism, education, environmental protection, modern logistics, telecommunication as well as finance," said Li Zhao, director of the committee.

Official statistics showed that the municipal government approved 783 foreign-funded projects in the service sector industry last year, involving US$1.72 billion contractual investment.

The figures were up 19.7 per cent and 9.6 percent on those in 2001.

"Modern logistics and commerce seem the most lucrative to foreign investors, with five Sino-foreign logistics enterprises established last year and seven foreign retailing conglomerates to enter the capital city this year," said Li.

The seven retailers were B&Q (Britain), OBI (Germany), Leroy Merlin (France), Seven-Eleven convenience store (US), Discount Shop (Spain), Auchan (France) and Wal-Mart, the world's No 1 chain supermarket operator.

A total of six Sino-foreign tourism joint ventures had been established in Beijing by the end of last year.

And American International Assurance (AIA) launched its Beijing Branch last year - the first foreign insurance company in the capital.

"In addition to further improving the investment environment, we began exploring some new capital introduction models to lure more foreign investors," Li said.

The government plans to oversee the introduction of venture capital, transnational mergers, assets reorganization and property rights transfer, to let foreigners take part in the reform of domestic enterprises, especially State-owned ones.

Last year, two joint ventures - Sanyuan Food and Badaling Tourism - carried out property rights reform, which paved the way for a public listing.

Sun Jiuwen, professor of Peking University and a member of the Adviser Group for Beijing Municipal Government, said foreign funds flowing into the service sector will aid efforts to meet the huge capital demand of the 2008 Olympic Games and create job opportunities for Beijing residents.

(China Daily January 22, 2003)