China to Revise FDI Procedures

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Apr. 16 – China will further revise its foreign direct investment (FDI) approval procedures in a bid to make the process efficient and channel more investments to the western and central parts of the country.

Despite China’s FDI inflow slowing down for the sixth consecutive month, March figures indicate that the economy may be picking up.

FDI inflows for March was down 9.5 percent from a year earlier US$8.4 billion in sharp contrast to a 15.81 percent decrease in February and 32.67 percent drop in January.

China has been quick to implement measures to maintain FDI flow. Last month, Beijing gave local governments the authority to approve FDI proposals worth as much as US$100 million. Moreover, value-added-tax rebates were also given to various export products.

Ministry of Commerce spokesperson Yao Jian told Xinhua: “FDI is of great significance in creating jobs and stimulating the economy.”

The MOC is encouraging investment high-tech, services and environment protection sectors. FDI plays an important role in the Chinese economy because its accounts for 30 percent of industrial output, 55 percent of imports and exports while providing 11 percent of urban jobs.

Yao told the Wall Street Journal that the country’s export stimulus policies are beginning to show an effect, and that he expects foreign trade to show further recovery after the first quarter. He added that imports related to processing are likely to remain slow.

Analysts are predicting that the deluge of government spending and steady consumer confidence may lead China to reach its target of 8 percent GDP growth. A Chinese recovery will spell good news for the rest of Asia as they expect demand from China to increase. This will also affect the commodities market, as China orders boosts orders of iron ore, copper and oil to build its massive infrastructure projects.