China used a total of US$230 billion of foreign capital from 1996
to 1999, which helped push forward the economy, according to official
The figure is expected to hit US$290 billion by the end of 2000,
an increase of US$130 billion over the eighth Five-Year (1991-95)
Experts attribute this rise to the central government's "active,
rational and efficient" policies to use foreign funds, a favorable
investment climate in China and infrastructure upgrading. Improvements
in the legal system, efficient government administration and overseas
investors confidence in China's political, social and economic developments
have also been attributed to the rise.
Direct foreign investment and loans from overseas financial institutions
reached US$184.5 billion and US$46 billion respectively during the
first four years of the ninth Five-Year Plan (1996-2000). These
figures are expected to hit US$230 billion and US$57 billion for
the whole of this period. This will represent growth of 100 percent
and 25 percent respectively compared to the last five-year plan
In addition, from 1993 to 1999 annual foreign investment in China
was the highest among all developing countries.
Preferential loans from the World Bank, the Asian Development Bank
and various foreign governments have helped develop China's agriculture,
water conservation, transport systems, energy development, urban
infrastructure and environmental protection. About 65 percent of
this has been used in the relatively undeveloped central and western
Thanks to new regulations during this period, foreign capital has
gone into new developing fields, such as finance, tourism, commerce
For example, by the end of 1999, 13 overseas-funded and joint venture
banks and 157 branches of foreign banks were carrying out business
in China as restrictions on their activities were eased.
Foreign capital was used well during the last five years as more
funds were invested in manufacturing and high-tech industries. Less
money was spent in real estate, with 61.5 percent of investment
spent in the previous areas and 10.1 percent in the latter in 1999.
Investors appeared to prefer high-tech companies, such as Huanhong
Electricity, Chongqing BP Chemicals and Zhenjiang Asia Paper Plant.
The world's leading multi-national firms have also played an active
role in China in the last few years. Among the world's top 500 companies,
around 400 have invested in the country.
During the ninth Five-Year Plan period, various schemes to attract
investment were introduced, including build-operate-transfer (BOT)
projects, stock issues at home and abroad and bond issues.
Attracting foreign capital has helped the healthy and rapid development
of the economy and the smooth implementation of the country's ninth
(China Daily 09/27/2000)