China on Thursday published its 11th Five-year Plan (2006-2010) for utilizing
foreign investment and it states the policy priority will be given
to the quality rather than quantity of such investments.
The National Development and Reform Commission (NDRC) published
the document on its website. This is the first time such a document
has been published.
"This is an important measure taken by China in creating a
stable and transparent foreign investment management system as well
as a fair and predictable policy environment," the NDRC said.
According to the document, China utilized US$383 billion of
overseas investment during the 10th
Five-year Plan period (2001-2005), including US$286 billion in
overseas direct investment, US$38 billion in stock issuances and
US$46 billion in foreign loans.
It criticizes some local governments for their blind efforts to
secure foreign investments, some of which are apparently against
the central government's industrial policy.
The document notes that emerging monopolies by foreign
businesses in certain industries are posing a potential threat to
China's economic security.
It also criticizes foreign businesses for abusing intellectual
property rights protection laws. This ?has adversely affected
Chinese enterprises' capacity for independent innovations, it
observes. ?
The document says China will push for further shifting of policy
priority from the quantity to the quality of foreign investment
during the next five years.
Priority will be given to the introduction of advanced
technologies, management expertise and high-quality talents rather
than the use of foreign capital, the document says.
More emphasis shall also be given to the protection of the
environment and efficient use of natural resources, it states.
?
The document stresses the need for more foreign investment in
areas such as research and development as well as sophisticated
design so China could eventually become a major manufacturer of
high value-added products.
It also calls for more foreign investment in China's remote west
and the northeast rust belt. They currently lag far behind the
coastal regions in the amount of foreign investment.
Despite the emphasis on quality the document says China expects
its foreign investment to keep rising in the next few years.
"During the 11th Five-year Plan period the domestic and
international environment affecting foreign investment in China
will generally tend to improve, making it possible for China to
improve the quality of foreign investment while maintaining
quantity," the document says.
According to the document China will continue to encourage
foreign investment in agriculture, electronics and information,
petrochemicals, chemicals, automobiles and infrastructure.
Foreign businesses will be encouraged to take part in the
restructuring of traditional industries such as machinery, light
industry, textile, raw materials and construction.
Foreign investment in environment protection, including the
control of water and air pollution and recycling will be welcomed,
the document states.
In the service sector the document says China will fulfill its
duties under the World Trade Organization and open its banking,
insurance, securities and telecommunications sectors to foreign
investment in a positive and prudent manner.
In response to the rising concern over foreign acquisitions of
leading Chinese firms in critical sectors, the document says China
will speed up legislation and step up the supervision of sensitive
acquisitions and takeovers to ensure critical industries and
enterprises remain under Chinese control.
(Xinhua News Agency November 10, 2006)