Foreign investors are urged to pay more attention to environmental protection and energy conservation.

"China will strengthen restrictions on foreign investment in energy-intensive high polluting and low efficiency industries," Vice-Minister of Commerce Wei Jianguo told a forum on the social responsibility of foreign invested firms in Beijing yesterday.

The country will encourage foreign investment in sectors involved in high-end manufacturing, energy conservation and environmental protection, as well as development and research centers, he said.

Investment in service sectors such as logistics and outsourcing will also be encouraged.

Many foreign-invested companies are better than their competitors in energy saving and environmental protection.

An official survey shows that 20 out of 38 environmentally friendly firms are foreign-funded, accounting for about 53 percent of the total, Wei said.

"However, we still see some foreign investors in China simply focusing on cutting costs and neglecting requirements on product security, environmental protection and the security of staff," Wei said.

He wants foreign-invested companies to attach more importance to natural resources, the environment, and corporative social responsibility.

The move is part of China's efforts to improve the quality of foreign direct investment (FDI) it attracts.

In the first half of this year, China approved about 18,683 foreign companies, with a total FDI of $31.9 billion, up 12 percent from a year earlier.

Wei said during this period FDI flow into the manufacturing sector decreased by 4.5 percent year on year to $17 billion, its proportion down to 56 percent.

The government is also encouraging foreign investors to move to central, western and northeast China by giving them access to certain industries.

(China Daily August 28 2007)