I. Basic situation of China's foreign investment
utilization
(1) Enlarged
scale and accelerated speed
In 2004, Chinese economy has maintained a rapid
growth momentum. Although China adopted macro adjustment of the overheated
investment, such adjustment has not slowed down the step of foreign investments'
entry of the Chinese market and China still is a hot soil for Foreign Direct
Investment (FDI). A total of 43664 foreign-funded enterprises were approved to
set up in 2004, a growth of 6.3% compared with that of 2003. The contract
foreign investment volume was US$153.48 billion, a growth of 33.4% year-on-year
and a drop of 5.6% compared with that of 2003. The actual foreign investment
utilization volume was US$ 60.63 billion, a growth of 13.3% year-on-year and
11.9% percentage point higher than that of 2003. Such a growth speed is the
biggest since 1995 and only next to the 15.1% in 2001.
According to the bulletin
promulgated by UN Conference on Trade and Development in January 2005, the FDI
volume was US$ 612 billion in 2004, a growth of 5.5% compared with that of 2003.
This is the first rise up of FDI after the continual reduction since 2001. The
speed of China's absorption of foreign investment is higher than that of global
average. The actual foreign investment utilization volume is only next to that
of U.S (US$121 billion) and occupies 9.9% of that of the global volume and a
0.7% higher than that of 2003.
(2) The investment from major investment source countries/regions shows a
growing trend
In 2004, the number of newly established foreign
enterprises and the contract foreign investment volume of 10 Asian
countries/regions increased 5.7% and 24.3% respectively. The number of newly
established foreign enterprises and the contract foreign investment volume of 15
countries of European Union increased 16.8% and 42.8% respectively. The number
of newly established foreign enterprises and the contract foreign investment
volume of three major free ports increased 18.1% and 52.8% respectively. The
number of newly established foreign enterprises and the contract foreign
investment volume of the U.S and Canada increased -0.83% and 22.1% respectively.
Viewed from the growth of the foreign investment input actually, the growth of
10 Asian countries/regions, 15 countries of European Union, major free ports is
10.0%, 7.9% and 29.8% respectively and the growth speed up 5.4%, 1.9% and 36.5%
respectively compared with that of 2003; only the U.S and Canada reduced 4.4%
compared with that of last year but the descending slows down gradually. Viewed
from the proportion change, the investment volume of 10 Asian countries/regions,
15 countries of European Union and the U.S and Canada to the total investment
volume descended 1.9%, 0.4% and 1.4% respectively compared with that of 2003 and
the proportion for three major free ports increased 2.1%.
Remark: 10 Asian countries/regions refer to China Hong Kong,
Taiwan, Japan, Philippine, Thailand, Malaysia, Singapore, Indonesia and South
Korea; 15 countries of European Union refer to Belgium, Denmark, U.K, Germany,
France, Ireland, Italy, Luxemburg, Netherlands, Greece, Portuguese, Spain,
Australia, Finland and Sweden; three free ports refer to Virgin Islands, Cayman
Islands and Samoa.
China Hong Kong and Virgin Islands occupies the top two
positions on the ranking of country/region having investment in China in 2004.
The rank of South Korea changed from the 4th place to the 3rd. The rank of
Cayman Islands changed from the 9th place to the 7th, while the rank for Japan,
Singapore and Samoa changed from 3rd, 7th and 8th to the 4th, 8th and 9th. (See
Table 2). In recent years, the ratio of the actual investment volume of top 10
countries/regions having investment in China to the actual utilization sum shows
a trend of descending and drops from 86.5% in 2002 to 83.7% in 2004.
(3)
Foreign investment utilization of East China, Central China and West China grow
all-roundly and Northeast China become a hot soil for investment
Foreign
investment utilization of East China, Central China and West China grew
all-roundly in 2001. A total of 37 978 foreign-funded enterprises were newly
established in East China, a growth of 5.0% year-on-year. The contract foreign
investment volume was US$132.43 billion, a growth of 31.7% year-on-year. The
actual foreign investment utilization was US$52.21 billion, a growth of 13.6%
year-on-year. A total of 3771 foreign-funded enterprises were newly established
in Central China, a growth of 18.7% year-on-year. The contract foreign
investment volume was US$13.13 billion, a growth of 37.4% year-on-year. The
actual foreign investment utilization was US$6.68 billion, a growth of 14.6%
year-on-year. A total of 1915 foreign-funded enterprises were newly established
in West China, a growth of 9.7% year-on-year. The contract foreign investment
volume was US$7.93 billion, a growth of 58.9% year-on-year. The actual foreign
investment utilization was US$1.74 billion, a growth of 1.2%
year-on-year.
After the nation adopts the strategy of rejuvenating old
industrial base in Northeast China, the agreeable industrial development basis
and investment environment is improving constantly, making the base a hot soil
for foreign investment. The foreign investment growth in Northeast China was far
higher than the national average in 2004.
A total of 3072 foreign-funded
enterprises were newly established in Liaoning, Jilin and Heilongjiang, the
contract foreign investment volume was US$10.68 billion and the actual foreign
investment utilization was US$5.94 billion, a growth of 9.3%, 40.1% and 78.0%
respectively. The actual foreign investment utilization takes a share of 9.8% in
the foreign investment utilization volume of the whole country, up 3.6% compared
with that of 2003.
(4) More solely-funded enterprises are
established
With foreign investors' familiarity and further understanding
of China's economic and social environment, the mode of foreign investment in
China is also changing. Solely-funding and controlling has gradually replaced
the original joint venture and contractual mode and begins to take a leading
position. Especially after China's accession to WTO, more and more enterprises
want to establish solely funded enterprises. Some MNCs change joint venture into
solely foreign-funded enterprises. In 2004, solely foreign-funded enterprises
continue to maintain a high-speed growth. The project number, contract volume
and actual utilization increase 14.0%, 43.7% and 20.5% respectively, 7.7%, 10.3%
and 7.2% higher than the national average of the three indicators. The ratio of
the three indicators of solely foreign-funded enterprises to that of national
total is 70.3%, 76.4% and 66.3% respectively, up 4.7%, 5.5%, 4.0% compared with
that of 2003.
The year of 2004 is the third year after China's accession
to WTO. Many previous joint ventures as, P&G, Avon, Panasonic, Unilever and
Siemens changed into solely-funded enterprises.
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