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China to Continue Active Use of Foreign Funds in Coming Five Years
2006-09-30

 

By Yu Yuanjiang, China Features

Although China will adjust its main purposes, concepts and industrial and zonal focuses of using foreign funds to adapt to the changing domestic and global situation, it will continue to actively and effectively utilize foreign capital while taking the initiative to avoid and eliminate various kinds of risks to secure national security during the 11th five-year development program period (2006-2010), according to Fu Shan, an official with the Department of Foreign Capital Utilization of the National Development and Reform Commission (NDRC).

Fu confirmed that a national program on using foreign funds during the 11th five-year development program period has just been formulated and issued by the NDRC. In accordance with the program, efforts will be made to thoroughly apply the "scientific concept of development", which stresses a more balanced and coordinated development and underlines environmental protection and saving of resources, and more attention will be paid to the "quality" instead of the "quantity" of foreign funds. Emphasis will also be laid on importing advanced technologies and experienced and high-quality managing personnel. More attention should be paid to ecological balance, environment protection, and saving and comprehensive utilization of natural and energy resources, thus integrating the utilization of foreign funds with the upgrading of domestic industrial structure and the improvement of the technological level.

In attracting foreign funds in the period, Fu said, the focus should be direct foreign investment. Besides, it is necessary to encourage foreign funds to take part in the reorganization or transformation of domestic enterprises in such forms as merger, share-purchase or re-investment. Except in those major fields and major enterprises which are related to national security, restrictions on foreign holding companies will be gradually lifted.

Meanwhile, Fu stressed, it is necessary to step up the pace of formulating and promulgating the Anti-Monopoly Law; give further details on policies towards those sensitive industries or major enterprises which are related to national security or have a significant bearing on national economy and people's livelihood; improve the industry-access system for foreign funds; strengthen examination and supervision of the merger cases which are related to the above-mentioned sensitive industries or major enterprises and involve foreign funds, so as to secure the state's control over the development of those strategic industries and major enterprises; and amend the Law on Enterprises' Income Taxation to introduce a unified taxation system for both domestic and foreign-funded enterprises.

Fu said efforts will be made to optimize and upgrade the foreign-funded industrial structure, encourage foreign investors to make contributions to the development of China's modern agriculture with emphasis on the development of ecological agriculture and high-tech-based and high-value-added farming, such as planting, breeding, comprehensive utilization of agricultural waste, tapping of biological energy, development and manufacturing of modern farming machinery and equipment, deep processing of farm produce, and import of modern farming technologies and managing systems.

Besides, foreign business people will continue to be encouraged to invest in such industries as electronic information, petrochemicals, chemicals and automobiles. They will be urged to take part in the reorganization and transformation of the country's traditional industries including machinery, light industry, textiles, raw materials, construction and building materials, and to invest in infrastructure facilities and environment-friendly projects, especially ecological and environmental projects in central and western China. Meanwhile, China will continue to actively and steadily open up its service sectors, such as banking, insurance, securities, telecommunications, commerce and freight transport, to the outside world.

Large multinational companies are encouraged to shift their high-tech and high-value-added processing and manufacturing sectors and their research and development institutions to China, and to set up production and manufacture bases, auxiliary bases and training bases in the country, so as to bring the effect of technological overflow into play and enhance Chinese enterprises' ability of independent innovation.

Since its accession to the World Trade Organization, China has entered a new stage featuring comprehensive international economic cooperation and competition in the utilization of foreign funds, Fu pointed out. During the 10th five-year development plan period (2001-2005), China actually used a total of about US$383 billion of foreign funds, 34 percent more than in the ninth five-year plan period. The capital involved includes $286 billion of direct overseas investment, $38 billion of funds raised through Chinese enterprises' listing abroad, and $46 billion of overseas credit.

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