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Cooling Economy Won't Slow Foreign Investment

China's measures to cool overheated parts of the economy will not stem the flow of foreign investment. Foreign investment in 2004 may roughly match or exceed the US$53.5 billion of 2003, said Vice Minister of Commerce Ma Xiuhong Wednesday.

"Sustainable growth of China's economy will, in turn, drive up foreign investment and help attract high-quality investment," Ma said at a press conference for the 8th China International Fair for Investment and Trade (CIFIT). The fair is the nation's only international fair focusing on overseas investment. It will be held from September 8 to 11 in Xiamen.

"There are no data showing that foreign investment in the steel, cement and aluminum sectors is excessive," Ma said.

She also made it clear that China does not welcome investment by Taiwan business people who are in favor of independence from the Chinese mainland.

"One thing is certain: we will not welcome those Taiwan business people who are resolutely in support of Taiwan independence or undertake separatist activities," Ma said. However, she stressed that the policy to encourage Taiwan compatriots to invest in the mainland has not changed.

"Their legitimate rights and interests will be protected by our laws and regulations," she said.

Foreign direct investment (FDI) rose 1.4 percent in 2003 to US$53.5 billion.

In the first five months of 2004, China attracted US$25.9 billion in FDI, up 11.3 percent from the same period a year earlier. Ma described that as a suitable rate of growth.

"The actual amount of foreign investment in 2004 is expected to roughly keep the level of 2003 and we will strive to achieve a certain increase," she added.

Despite the growth, Ma said the Ministry of Commerce still faces the challenges of bringing China's full advantages into play to lure more FDI. The goal, she said, is to figure out how to make the investment better serve domestic economic development.

Ma said China's FDI structure has been improved. The service sector attracted more investment, and foreign investors showed greater interest in high-tech industries and research and development centers.

She said the FDI growth was very rapid in central and western China, as well as the old industrial base in the northeast. However, eastern China still took away more than 85 percent of the total FDI.

Foreign-funded enterprises in China generated a combined industrial added value of 314.3 billion yuan (US$37.9 billion) in the first quarter of this year, a rise of 21.1 percent from 2003's corresponding figure, and accounting for 27.8 percent of the national total.

From January to May, foreign-funded enterprises exported US$119.0 billion worth of goods, up 41.8 percent year-on-year and accounting for 57.3 percent of China's total.

Foreign-funded enterprises paid taxes worth 122.7 billion yuan (US$14.8 billion), rising 23.0 percent and representing for 19.6 percent of the country's total.

(China Daily June 17, 2004)

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