Commerce Minister Chen Deming took a group interview of reporters home and abroad on afternoon of Mar. 12. He noted it was required to improve the utilizing quality and level of foreign capitals, optimize industrial structures and regional layout of foreign capital utilization and further the opening-up, in particular, opening-up of service industry, in the Government work Report made by Premier Wen. Positive was the trend of foreign investment this year. Though many friends had worries about the series of adjustments on macroeconomic control last year, the facts had testified there were nothing negative impacts, Chen said.
Chen made commentary on impacts of some adjustments on policies concerning foreign-invested enterprises such as business income tax, as well as trade released last year by China on China-based foreign-invested enterprises and whether there would be any adjustments on policies concerning investment solicitation this year.
In his view, the causes for the growth of FDI in Jan. are in the following four aspects: first, considering the situation in the first three months of the year, settlement of large projects in China is speeding up; especially, investment from enterprises with capital over USD30m is increased by 2.5 times, which manifests international and outbound investors still have positive view on Chinese economic prospect.
Second, it is incented by policies. The appreciation of Renminbi hastens financial contribution by investors. As foreign investor that intent to invest in China, their would wish to convert USD to RMB as soon as possible due to appreciation of the latter and depreciation of the former; otherwise, the total money converted into RMB would be less. Therefore, the anticipation of appreciation of RMB expedites the financial contribution of some enterprises.
Third, it is influenced by adjustments and changes of policies. Before the end of last year, 40 percent of business income taxes they paid would be returned to them, if foreign-invested enterprises reinvest their profits gained in China here. However, the policy won’t be applicable this year, since China has carried out “unified income tax system for both domestic and foreign enterprises”, thus, many foreign-invested enterprises made their reinvestment of profits gained in China in this period.
Fourth, China has issued policies that encourage foreign-invested enterprises to invest in central and western China, which is working. The utilization of foreign capital in these areas has risen by 1.4 times and 3.3 times respectively. It is quite obvious that foreign investment has transferred westwards, particularly some processing industries.
Of course, there are profound international influences and backgrounds, that is, the influences of subprime mortgage. Since the economic growth of developed countries is slowing down, investors believe investing in China is more profitable and prefer to invest in China.
Chen pointed out that the growth of foreign investment demonstrated the improvement of investment environment in China. International FDI reached USD1.5t in 2007, up by 18 percent year-on-year, based on that of 2006, a year with a growth by 38 percent against that of 2005; in addition, transnational investment of international capital was tend to develop, according to statistics by the United Nations Conference on Trade and Development. Given this, China would attract more foreign investment this year. Of cause, China still had lots of work to do. Except above mentioned optimization of industrial structure and regional layout, it would lay certain restricts for investment projects featuring high pollution and high energy and resource consumption. Taking account of the situation of China and environmental protection, it would take action to some projects that violated applicable laws and regulations. In general, the situation in China would be satisfied.
Among the USD1.5t transnational investment in the world last year, almost 67 percent of them are realized in manner of M&A. Among 74.8b foreign investment in China last year, 97 percent went to land investment, which meant to take over land to build plants and expand investment. China would promote transnational equity M&A and encourage foreign investors to join the reform and reorganization of state-owned enterprises in manner of M&A and foreign high-tech companies to invest in China.