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Decline in FDI sees move to reverse flow

IN response to falling foreign direct investment in the country, China will provide better support and enhance government efficiency in a bid to reverse the decline, said the Ministry of Commerce yesterday.

China has seen a drop in FDI for seven consecutive months.

"We will conduct an overall check of administrative procedure over FDI to better regulate the process, cut unnecessary fees and reduce unnecessary steps in the procedure," said the ministry on its Website.

The government will enhance support to attract foreign investment into industries featuring high technology, advanced manufacturing, eco-friendly sectors and modern services.

Foreign companies will be encouraged to set up regional headquarters, research centers, logistic hubs, outsourcing and training centers in China. The government will push foreign firms to invest in China's central and western areas by improving the investment climate there.

To help foreign companies raise funds, the government will improve financial services and accelerate a study on allowing foreign-incorporated enterprises to get listed in the mainland.

They are part of measures to stabilize the flow of FDI in China. According to the ministry, 6,241 foreign companies were set up in the mainland from January to April, a drop of 34.2 percent compared with a year earlier. The amount of foreign capital actually used fell 21 percent on an annual basis to US$27.67 billion.

The global recession and fiercer competition with other countries in attracting FDI were cited as two major reasons for the sharp drop.

The ministry said it sees the flow of global FDI this year to shrink by 30 percent to 40 percent, as other countries are also retaining funds at home to stabilize their own economies.

By the end of April, there were 666,000 foreign companies in the mainland, with combined investment actually used nearing US$883 billion and creating 45 million jobs. Foreign firms accounted for about 3 percent of companies in China but generated 29.7 percent of the total industrial output last year.


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