With China further opening its service sector in 2006, foreign direct investment (FDI) in this area is expected to continue increasing, according to a report from the Research Institute under the Ministry of Commerce.

 

FDI in the service sector has more than doubled from the 1990s to 2002, the report said. Investment in the service industry reached $452 billion in 2002, 70 percent of the total FDI, compared with less than half the overall investment in the 1990s.

 

As China's service sector gradually opens up, the finance, distribution, telecom service and professional consultancy industries including legal, accounting and public relations services are the new targets of foreign investors, the report said.

 

In 2005, 80 percent of foreign investment went to the finance, real estate and business services industries. China's finance industry attracted the largest investment of $12.3 billion, with seven banks luring funds under the qualified foreign institutional investors program.

 

According to the report, foreign investment in the information technology, computer services and software industries has been increasing at a lower rate than the world average. These sectors attracted $1.01 billion in 2005, an increase of 9.75 percent on the previous year.

 

The pattern of foreign investment is also changing, the report said. Mergers and acquisitions have gradually taken the place of joint ventures to become the major form of investment.

 

(China Daily February 7, 2007)