FDI steered on hi-tech, green path

By Jiang Wei (China Daily)
Updated: 2007-11-08 07:31

Foreign investors will be barred from some resource-intensive or high-polluting sectors and encouraged to invest in high-tech and environment friendly projects, the country's top economic planner said Wednesday.

The Catalogue of Industries for Guiding Foreign Investment, jointly issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce, was published on the NDRC website and will take effect on December 1.

In manufacturing, foreign businesses are encouraged to invest in high-tech sectors, and equipment and new material manufacturing; in services, they are encouraged to invest in outsourcing and logistics, the NDRC said in a statement on changes to regulations on foreign investment issued three years ago.

Some traditional manufacturing sectors, in which domestic enterprises have developed advanced technologies and strong production capacity, have been removed from the category in which the government encourages foreign investment.

"China expects to see more foreign investors move to service sectors because it will reduce the dependence on the manufacturing sector," Pei Changhong, a researcher with the Chinese Academy of Social Sciences, said Wednesday at a forum organized by the China Association of Enterprises with Foreign Investment.

In mining, China will ban foreign players from mining some "important minerals that cannot be recycled" as well as high-energy consuming or highly-polluting projects. But foreign investment is encouraged in projects that require advanced technology.

According to the latest guidelines, the government will no longer give the green light to all export-oriented foreign direct investment.

The move is aimed at addressing the challenges of the widening trade surplus, which hit $185.65 billion in the first three quarters, and swelling foreign exchange reserves, which reached $1.43 trillion by September, the NDRC said.

Pei also said he expects foreign players to pump in more money in central and western China instead of concentrating in the coastal provinces and cities, which account for 90 percent of the country's foreign investment.

The new regulation is in line with policies the country has adopted for over a year.

The central government is stepping up efforts to promote environmental protection and save energy through a series of measures, including shutting down small- and low-efficient steel mills, stopping processing trade of high-polluting and energy-intensive products, as well as scrapping or cutting tax rebates for resource-intensive exports.

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