The realized foreign direct investment (FDI) in China climbed over 13 percent in the first two months
of this year.
The news comes amid concerns that the newly introduced
unified corporate income tax rates might affect the FDI inflow.
China
received some $9.7 billion in FDI from January to February, up 13.04 percent
from the previous year, the Ministry of Commerce said yesterday.
The continued rise
in FDI marks the uptrend since the end of last year, after minor dips in the
middle of 2006.
With a view to capitalise on the vast market of 1.3
billion people and low labor costs, "nearly every foreign investor wants a share
of the China pie", said Hu Yanni, an analyst with China Securities Research of
CITIC.
But she said the FDI growth rate is not expected to exceed 10
percent this year because of an already inflated base. FDI in China was $63
billion in 2006.
Foreign companies will have to pay 25 percent corporate
tax, up from the current 15 percent, according to the draft law on corporate
income taxes, which is expected to be passed in this session of the National
People's Congress and will come into effect from next year.
However, the
government will continue to encourage foreign investment in the country's
west.
China is also encouraging high value-added manufacturing sectors and services industries while halting approvals for
foreign investments in high-pollution and low-efficiency ventures.
The
ministry approved 5,716 foreign-invested enterprises in the past two months, up
11.29 percent from the previous year.
It did not disclose the amount of
contracted investment the FDI agreements yet to be fulfilled, as opposed to the
ones realized.
In the first two months of this year, Hong
Kong invested $2.95 billion to become the largest investor on the mainland.
It was followed by the Virgin Islands and Japan. In this period, the US' actual
FDI to China hit $448 million, up 15.7 percent year-on-year.
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