Economy

Government 'listening' to overseas businesses

By Ding Qingfen (China Daily)
Updated: 2010-08-18 09:10

Containers are loaded on a cargo ship for export at the port of Tianjin. China has become a major manufacturing center for many multinational firms. [Provided to China Daily]

BEIJING - The government has vowed to "carefully listen" to the voices of foreign businesses based here, while at the same time, experts said there have been "improvements" on relevant policies, and international firms should focus on the big picture rather than small bumps in the road.

Over the past three decades, huge amounts of foreign direct investment (FDI) have flown into China, helping make the nation the second largest foreign direct investment destination. However, adjustments by the government to foreign investment policies has caused many to express concern the nation is not as welcoming of foreign enterprises. This has resulted in a growing number of complaints over the past few months from these entities that the investment environment in China is deteriorating.

Since February, Premier Wen Jiabao has confirmed eight times that China always welcomes foreign enterprises and will provides them with treatment equal to that of domestic companies, and the nation is always willing to receive feedback from them. He reiterated the stance most recently during his meeting with German Chancellor Angela Merkel.

"There is no reason for China to bar foreign investment China should always welcome them - even when the nation becomes a developed nation," Wang Zhile, director of the Research Center on Transnational Corporations under the Ministry of Commerce, said.

In 2008, China's foreign direct investment hit a historic high, but the size of the investment was still one third of that the US took in during the same period.

"China needs quality foreign investment to optimize its economy," Wang said.

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Previously there were many assertions domestically that foreign investment would hurt the development of domestic firms and dominate some local industries, but the government never changed its position on foreign direct investment.

In 1998, these guidelines identified "legally registered foreign enterprises as part of Chinese enterprises."

And last December, the State Council also pointed out foreign enterprises "were encouraged to participate in mergers and acquisitions of State-owned enterprises."

The most striking is the new foreign direct investment development guidelines launched this April, which include preferential policies for land use and tax. But many international enterprises are still worried the government is setting the bar higher for foreign investment and encouraging these entities to target the renewable energy, high technology and service industries in central and western areas of the country.

Wang disagreed. "This is a result of the transformation of the economic development mode with China and foreign investors need to do more research on China and try to match their commercial focus on those changes," he said.

"It's not wise of them to easily give up on the market."