China’s use of foreign funds in first quarter

According to statistics from Chinese Ministry of Commerce, in the first quarter of 2014, 4,787 foreign-invested enterprises were set up, with US$31.55 billion foreign funds actually used, up 5.5% year on year. Industrial structure and regional structure got further optimized, either the quantity or quality showed good signs of attracting foreign investment for the whole year. Following are some main features.

First, the use of foreign capital in service sector grew sharply. The actual use of foreign funds in service sector amounted to US$17.39 billion, up 20.6% year on year, 15.1 percentage points higher than the national average, taking up 55.2% of the country’s total. It was higher than that of 2013 and promoted the transformation and upgrading of national economic structure. Some key fields decided at the Third Plenary Session of the 18th CPC Central Committee, with culture, sports and entertainment on one hand and health, social security and social welfare on the other hand, became new destinations of foreign investment. The actual use of foreign funds in the two fields in the first quarter increased 476.8% and 269.2% year on year respectively. The actual use of foreign investment in computer service and software increased 40.8% year on year.

Second, central and western China saw growth in both the volume and share of using foreign investment. Utilized foreign capital in central China and western China amounted to US$3.61 billion and US$2.87 billion, up 44.5% and 21.4% respectively. Absorption of foreign capital in central China and western China took up 20.5% of the national total, 4.2 percentage points higher than that during the same period of 2013. The increase in actually utilized foreign capital in central China and western China accounted for 98.8% of nationwide increase. Central China and western China became a major region to attract foreign capital. Transnational companies increased their investment in China’s central and western areas. For example, French Renault added more than US$300 million to Hubei Dongfeng Renault Co., Ltd. and South Korea’s Samsung increased US$167 million to Samsung (China) Semiconductor Co., Ltd. in the city of Xi’an.

Third, major countries and regions maintained a steady growth of investment. The top ten investors were: Hong Kong, Singapore, South Korea, Taiwan, Japan, the United States, Germany, Britain, the Netherlands, and Macao. Actual investment from them added up to US$29.69 billion, up 7.9% year on year, and 94.1% of the total actually utilized foreign capital.

Since this year, Ministry of Commerce has been making active efforts to implement the Decision on Major Issues Concerning Comprehensively Deepening Reforms (hereinafter referred to as “the Decision”) approved by the Third Plenary Session of the 18th Communist Party of China Central Committee, carrying out the tasks and goals in the ministry’s Business Work Outline 2014, focusing on the theme of deepening reforms, transforming concepts and work patterns, and making efforts in the following aspects:

First, advancing reform of foreign investment management system. The pilot of management mode on negative list together with pre-access national treatment in the China (Shanghai) Pilot Free Trade Zone has been analyzed and assessed. Monitoring mechanism has been improved to guide the pilot zone to revise the negative list and further expand pilot opening fields. Approval procedures for foreign investment have been optimized. Connecting work about the reform of foreign funds management has been handled well with industry and commerce administration and other departments. The revision of laws regarding foreign funds management has been carried out in accordance with the principle of “unifying laws and regulations for domestic and overseas funds”.

Second, carrying out researches and mapping out measures to relax market entry. We have combed out the opening situations of ten service sectors and general manufacturing proposed in the Decision, and we are working with relevant departments to work out concrete opening measures.

Third, improving the level of regional development platform. We have strengthened the construction of ecological industrial parks, and enabled more eligible national economic development zones to jointly build ecological parks with developed countries. On March 26, in the witness of Chinese President Xi Jinping and French President Francois Hollande, Chinese Commerce Minister Gao Hucheng and French Foreign Trade Minister Nicole Bricq signed an MOU on ecological parks between the Ministry of Commerce of China and Ministry of Foreign Trade of France. According to the MOU, China and France will co-build China-France Shenyang Ecological Park and China-France Chengdu Ecological Park. In addition, we have accelerated the opening strategy in border areas and stepped up the construction of China-Vietnam Trans-border Economic Cooperation Zone.

Next, Ministry of Commerce will follow the arrangements in the Decision, quicken to revise three laws concerning foreign funds in the principle of unifying laws and regulations on domestic and foreign funds; relax investment entry to further open investment areas; focus on the management pattern of pre-access national treatment together with a negative list to push forward nationwide foreign funds management reform; strive for a new overall opening pattern to improve the opening level of inland and border areas, so as to create a fair, transparent and stable investment environment in line with international practices.




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