President Kai Kammerich, Esteemed Guests, Ladies, Gentlemen and Friends,

Good morning!

I am very glad to have the opportunity to attend the International Investment Promotion Agencies Roundtable Conference. On behalf of the Ministry of Commerce of the People’s Republic of China and myself, I would like to extend warm welcome to the representatives of the investment promotion agencies of 44 countries and regions including Turkey, Namibia, Poland, Australia, Canada and the UK and the representatives of Chinese investment promotion agencies present at the Conference. Meanwhile, I would also like to extend my sincere thanks to Mr. Kai Kammerich, President of WAIPA for being present here.

The International Investment Promotion Agencies Roundtable Conference is not only an important meeting during the 11th China International Fair for Investment and Trade (CIFIT), but also another important activity for closer cooperation between the Ministry of Commerce of China and WAIPA. I believe that the representatives participating in the Conference will benefit from mutual exchange of experiences. Today, I would like to take this opportunity to briefly introduce to you China’s absorption of foreign capitals, external investment, and the situation and development trend of the service sector in China.

In the past more than 20 years of reform and opening up endeavor, China’s economy has maintained a rapid and healthy growth. We have developed an all-dimensional, multi-layered and wide-ranging opening pattern, and remarkable achievements have been made in both absorption of foreign capitals and external investment. The sustained increase in absorption of foreign capitals and external investment in recent years has the following three features. First, the foreign investment mix has continued to be optimized. By June 2007, there were 18683 newly approved enterprises with foreign investment throughout the country, a drop of 5.4% over the same period of the previous year; and there was USD 31.9 billion of foreign capitals actually used, a 12.2% rise. The industrial mix of the foreign capitals absorbed has been improved. There has been an sharp increase in the amount of foreign capitals used by the service sector which reached USD 13.8 billion in the first half of 2007, a 58.2% rise over the same period of the previous year, with the proportion in the amount of foreign capitals actually used has rising from 30.6% in the first half of 2006 to 43.2%. The quality of the foreign capitals used has been upgraded, and the proportions of foreign investment in high-tech industries, research and development, high-end manufacturing sectors and the environmental protection industry have been further elevated.

Second, there has been an obvious improvement in the geographical structure of foreign investment. The “Businesses Drive Westward” Program implemented by the Ministry of Commerce has attained positive results by promoting the gradient transfer of foreign investment towards the middle and western region. In the first half of 2007, the amount of foreign capitals actually used by the middle and western region increased by 21.7%, a 9.5% higher than the nationwide increase rate. Remarkable progress has been made in the prioritized undertaking of transferred international service outsourcing projects facilitated by the Ministry of Commerce. The 625 enterprises under prioritized foster alone have undertaken the service outsourcing businesses of more than 50 multinational companies. The amount of information and technical outsourcing and business process outsourcing undertaken by the 11 base cities for service outsourcing continued to maintain a relatively fast growth in the first 6 months this year.

Third, steady development has been made in external investment cooperation. The Ministry of Commerce has continued to strengthen the guidance over external investment cooperation and steadily implemented the construction of overseas economic and trade cooperation zones so as to facilitate the healthy development of external contracting projects and labor cooperation. In the first half of 2007, the non-financial external direct investment made by China reached USD 7.8 billion, a 21% rise over the same period of 2006. The distribution of the investments has also become increasingly wide. Currently, Chinese-capital enterprises have been established in more than 160 countries and regions around the globe. The Chinese Government has actively supported and encouraged powerful enterprises with good credit standings of various ownership types to invest and develop business in other countries in the world according to internationally applied business rules so as to achieve mutual complementarities and joint development. The amount of newly contracted values of external contracting projects has increased by 35%, and the newly contracted values of 59 external contracting projects have exceeded USD 100 million respectively. Currently, 46 Chinese enterprises have become the world’s biggest 225 international contractors, and their main cooperation scopes have been expanded from mainly civil engineering and other labor-intensive projects to metallurgy, petrochemical, power, railway traffic and other capital-intensive sectors.

Ladies and gentlemen,

With the constant deepening of the world’s economic globalization, the position of the service sector in the adjustment of industrial structures is constantly rising, and transnational direct investment has gradually turned to the service sector.

Therefore, it should bear practical significance now for us to deliberate on the investment promotion in the service sector.

The service sector is facing new situations and new opportunities in the transnational investment. First, it is facing the great opportunity of a new round of transnational shift in services. There has been abrupt growth in transnational investment in the service sector in the whole world, and there have been transnational mergers in services. Transnational merger is a main way for transnational investment in the service sector. In recent years, there have been a number of transnational mergers and reorganizations in the burgeoning service sector. Second, service trade is developing rapidly. From 2000 to 2006, the world’s import and export volume of services has kept a growth rate of 10% on an annual basis. In 2006, the world export and import volumes in services reached USD 2.71 trillion and USD 2.62 trillion, an 11% and 10% rise over the previous year respectively. Third, the service sector characterized by service outsourcing has maintained a rapid growth. In 2006, the total amount of the global service outsourcing market was USD 917.8 billion.

In the major trend of transnational investment in services, China already has the basic conditions for undertaking international transfer of services because of its excellent macro economic situation and huge market advantages. The gigantic manufacturing industry has created tremendous service demands, and this has made China quite attractive to the multinational companies. The service sector in China enjoys a great potential for absorbing foreign capitals and the development of service trade. China also enjoys high-quality and cheap comprehensive human resources which include a certain middle and high-end technology management talents. It enjoys information infrastructures at relatively high levels and relatively strong supports for the information technology industry. Some coastal developed regions enjoy excellent open environment and awareness and therefore have taken the lead in terms of institutional innovation and the opening and development of specific functional areas. Therefore, they have already got prepared for the overall implementation of the strategy spearheaded by opening-up. Some international organizations have already regarded China as a burgeoning market with potentials for the service transfer and outsourcing of multinational companies and an important destination for the transfer of research and development.

    China will take positive and effective measure to accelerate the implementation of the strategy spearheaded by opening-up in the service sector. According to its economic development plan and commitment for entry into the WTO, China will expand the opening up in the service sector, encourage the introduction of internationally advanced service and management manners and orderly undertake international service transfer in a positive and reliable way; improve the policy system of FDI in the service sector and encourage foreign investments in services; innovate the service trade promotion mechanism, establish a service platform supporting domestic enterprises to “go out”, and provide market research, legal consultation, information, financial and management services; support the development of export-oriented enterprises, develop international transportation, continue to vigorously develop service trades enjoying comparative advantages such as tourism, external contracting projects and labor export, actively take part in international competitions, and expand mutually beneficial cooperation and joint development.

Ladies and gentlemen,

I wish this Roundtable Conference a complete success!

Thank you all!