FDI fueling China's economic boom

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Last updated at: (Beijing Time) Saturday, December 13, 2003

FDI fueling China's economic boom

Last year, China received the most foreign direct investment (FDI), outstripping that of the US in the world. This year sees even more FDI inflow into China. FDI, as the major channel for absorbing foreign capital, is helping rocket China's economy high into the sky.

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FDI fueling China's economic boom

Last year, China received the most foreign direct investment (FDI), outstripping that of the US in the world. This year sees even more FDI inflow into China. FDI, as the major channel for absorbing foreign capital, is helping rocket China's economy high into the sky.

In 1983 when China was still in its initial stage of reform and opening-up, China's real use of FDI only stood at USD636m. In 2002, the figure soared to USD52.743b, an increase of 82 times as against that in 1983.

According to the data available so far, foreign funded enterprises in China are generally running well. The growth rate of their major economic indices, including industrial added value, export volume, tax contribution, favorable balance in bank's Forex settlement and sales, are all above the national average. The ratio of these businesses in the national economic aggregates is going higher, especially in the economic increment.

A report of the Commerce of America showed that in the research 64 percent of American enterprises in China were satisfied with their profits here in China. A recent report of Trade and Development Organization under UN pointed out that one third of the FDI in China was reinvested with the profits gained by foreign funded enterprises in China. This is another evidence of attractive returns on their investment in China.

FDI has rewarded China generously, offering China's economy a pompous banquet. It has yielded a lot of benefits to China's industrial development, export, and tax revenue, holds Yuan Haiying, an official with the State Statistics Bureau.

From 1991 to 2002, the industrial output of enterprises based on FDI grew at an annual rate of 43.3 percent. These enterprises favored manufacturing sector, especially the processing. 68.6 percent of the 31,063 newly registered foreign funded enterprises in China were in the manufacturing industry and their real use of FDI amounted to USD36.8b, accounting for 69.8 percent of the gross FDI.

Tech intensive and further processing sectors have also attracted large sum of FDI. Analysis showed that better conditions for investment in China's hi-tech industry would greatly spur FDI in tech intensive industries while reducing FDI in general processing industries gradually.

Insiders pointed out that the proportion increase in which FDI rose in tech intensive processing industries while the decline in general processing were in harmony with China's industrial restructuring and upgrading and would obviously speed up the process in upgrading China's industrial structure.

Meanwhile, export from foreign funded enterprises contributed more and more motive forces to China's overall exports. Statistics of the customs office indicated that over the 13 years since 1990, export from foreign funded enterprises in China sped up more quickly than did the national gross export. This remarkable growth of export from foreign funded enterprises increased its proportion in China's overall export. In 2002, it accounted for 52.19 percent and nearly 40 percent higher than that of 1990. Exports from foreign funded enterprises in the previous ten months this year exceeded the whole export of last year by 11.4 percent, taking up 54.3 percent in China's gross exports. Export from these businesses have become a engine which is getting more powerful to boost China's overall export and its leading role is still being strengthened.

Tax revenue contributed by these foreign funded enterprises has also promoted the increase in the national tax revenue from the industrial and commercial sectors. Since 1993, foreign tax revenue mainly generated from foreign investment has been on a successive boom and its ratio in the national industrial and commercial gross tax revenue has been getting higher year on year. From 1993 to 2002, the whole tax revenue from foreign business rose by 39.8 annually and the ratio in the national total industrial and commercial tax revenue was up to 20.5 percent in 2002 from 4.25 percent in 1992. It has turned out a remarkable impetus for the expansion of national gross tax revenue from industrial and commercial sectors.

(By PD Online with article from China News Service & put into English by Li Jia)

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