BIZCHINA / Center
FDI up 10% in first 4 months
By Jiang Wei (China Daily)
Updated: 2007-05-17 08:40
China's foreign direct investment (FDI) increased over 10 percent
year-on-year in the first four months of 2007 despite concerns that
higher corporate income tax rates might affect the inflow.
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China drew $20.4 billion in FDI from January to April, up 10.2 percent
from a year earlier, according to Ministry of Commerce spokesman Wang
Xinpei.
Foreign investment in the service sector is expected to maintain robust
growth while investment in manufacturing is likely to decrease, said Shen
Danyang, a researcher with the Chinese Academy of International Trade and
Economic Cooperation, a think tank under the Ministry of Commerce.
"With five years (the grace period) elapsing since China entered the
World Trade Organization, the service industry will be further opened up
to foreign investors. New FDI will largely concentrate on sectors such as
transportation, computer services, distribution, tourism, architecture
and financial services," he said.
The FDI inflow grew rapidly till 2005, but has now entered a new phase of
steady rises, Shen said. But the inflow, he maintained, will remain high
this year.
He said some drop in FDI is not bad news because the investment structure
will be optimized in the process.
Since late last year, there have been rumors of the average corporate
income tax going up for foreign companies to 25 percent from 15 - a
measure finally passed by the National People's Congress this year.
China is now encouraging high value-added manufacturing sectors and
service industries while turning down foreign investments in
high-pollution and low-efficiency ventures.
The government is also encouraging foreign investments in western China.
In April alone, actual FDI reached $4.47 billion, 5.5 percent more than
in the previous year.
The ministry approved 12,349 foreign-invested enterprises in the past
four months, down 2.29 percent from the previous year. It did not
disclose the amount of contracted investment of the FDI agreements, as
opposed to the realized ones.
For the whole of 2006, China drew a record $63 billion in non-financial
FDI, up from $60.3 billion in 2005 and $60.6 billion in 2004.
The FDI figure released by the ministry excludes investments in the
financial sector.
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