Mr. Richard Hecklinger, Deputy Secretary-General,
Ladies and gentlemen,Good morning!
It's my honor to be invited to attend the OECD Global Forum on International Investment 2004. Let me first express my sincere gratitude to OECD and the Ministry of Commerce and Industry of India for your kind invitation. The major topics of this forum, such as the investment policies for promoting development, enhancement of investment climate, as well as realizing maximum benefits for developing countries in the international investment cooperation, are important issues, concerned very much by nearly every government. Taking this opportunity, I am going to brief you on China's policy of absorbing foreign direct investment, and the efforts made by the Chinese government to improve the investment environment. I hope that my introduction can help you to get a better understanding about China's situation of FDI absorption and can further enhance our cooperation.
Ladies and gentlemen,
Reform and opening up are the two fundamental State policies of China. Thanks to the persistent market economic reform and continuous market openings over the past 26 years, China has successfully realized the transition from the traditional planned economy to the market economy, and has completed the WTO accession. Today, China has integrated into the global economic system and is playing an important and positive role in promoting world economic prosperity.
Active utilization of FDI is always one of the very important elements of China's open-door policy. China's 26-year experiences of opening-up cannot be a success story without her positive efforts to encourage foreign investment. The Chinese government takes FDI absorption as one of the very effective measures to realize its goal of reform and economic development. In order to take the opportunities brought about by the restructuring of world economy and to speed up China's economic leap-forward development, the Chinese government timely formulates corresponding policy measures to encourage foreign investment, based on considering both of China's demands in various economic development stages and the trend of FDI in the world. Besides, the Chinese government actively push forward the adoption of investment policies by diversified investment promoting activities. Due to 26-year continuous efforts, China has managed to better its investment climate and improve the foreign investment structure and quality, achieving success in FDI utilization.
By the end of September this year, the investors from 192 countries and regions had accumulatively set up about 500,000 foreign-invested enterprises in China, with a total realized foreign capital of 550.2 billion US dollars, covering almost all of sectors, such as manufacturing, trade in services, agriculture, and infrastructure. Nearly 450 out of the world's top 500 transnational corporations have invested in China, part of them moved their regional headquarters into China. In recent years, over 600 foreign-funded R&D institutions have been put in place, and the hi-tech industries as well as trade in services are becoming the focus of foreign investors.
OECD members are one of the major sources of FDI for China. By the end of August 2004, 30 OECD members had established over 140,000 enterprises in China and injected 169 billion US dollars in actual terms, accounting for 28% and 31% respectively in China's total.
The 26 years of China's reform and opening up are 26 years when China has promoted its development through positively absorbing FDI and opening up wider to the outside world. Over the 26 years, FDI attraction in China has started from scratch, grown from strength to strength, expanded from the east to the central and western regions and continuously diversified in modality, optimized in industrial structure and regional distribution and improved in level. By forming an all-directional, multi-layered and wide-ranging pattern of FDI utilization, China has scored achievements that attracted world wide attention.
Ladies and gentlemen,
At present, the FDI in the world has demonstrated new development trends. The service outsourcing, and high-tech manufacturing outsourcing are becoming the features of a new round of world economic restructuring, which will provide significant opportunities, particularly for developing countries, to accelerate their economic development. To this end, the Chinese government, taking its WTO accession as a new starting point, push forward the investment and trade facilitation, and made great progress in further opening-up.
Since China became a full member of the WTO on December 11, 2001, the Chinese government has made great efforts to fully implement its commitments and further improve its investment environment.In order to implement WTO rules and China's commitments, the relevant departments of Chinese government have reviewed over 2,500 laws, regulations and rules, abolished 840 and amended nearly 400. China has managed to form a WTO-consistent foreign trade and economic legal system in less than 2 yeas.To further open the market, import tariffs have been greatly cut, non-tariff measures substantially reduced, and agricultural export subsidies completely removed. To comprehensively liberalize trade in services, nearly 40 laws and regulations have been formulated, which covers financing, insurance, trade, distribution, logistics, retail, communications, construction, tourism, transportation and many other sectors.
During the first 9 months of this year, a series of new measures have been taken to further improve the investment climate. For example: From July 1st this year, China started to implement the Law of Administrative Licensing, which restricts and minimizes the approval rights and licensing behavior of the government. The newly amended Foreign Trade law realized the commitment in trading rights, half a year ahead of schedule. The new regulation on foreign investment in the commercial sector, provided distribution rights based on the timetable.According to the amended rule on foreign financial institutions, the requirements of location, business scope and equity percentage have been further deregulated. The new guidelines to encourage foreign investors to invest in central and western China, as well as invest in both of high-tech and service sectors, will certainly promote a balanced development of regional economies, and accelerate the fast growth of high-tech and service industries in China. Besides, the new rules related to foreign investors on Automobile Financing Companies, the wholesaling of books, newspapers and magazines, movie and television production and distribution, have been promulgated recently.
The Chinese government pays high attention to Intellectual Property protection and sees it as an important component of enhancing investment environment. So far, China has built an IPR legal system, compatible with international rules, and joined almost all the international organizations of IPR protection. To strengthen the law enforcement, the Chinese government set up the Working Group of IPR protection, consisting of 12 State Council agencies. It is headed by the Vice Premier, Madam Wuyi, taking up the role of central leader and coordinator of nation-wide IPR protection. China's Supreme People's Court and Supreme People's Procuratorate is seizing every second to formulate the Legal Interpretation on Several Issues of Specific Law Application in Criminal Cases of IPR Violations in order to lower the threshold of criminal penalty against IPR violation. The Chinese governments at different levels hold the IPR Protection Publicity Week regularly and organize diversified activities on many occasions to raise people's awareness of IPR protection.
All of the efforts made by the Chinese government mentioned above, have produced remarkable results.
In the past 3 years, China's import continued a rapid growth and its FDI inflow has further increased. In 2003, China's import reached 412.8 billion US dollars, becoming the world's 3rd largest import market. The FDI inflows reached 53.5 billion US dollars, highest in the world. During the first 9 months this year, the imports and FDI inflow keep a good momentum. The total imports reached 412 billion US dollars, increasing by 38.2%. Over 30,000 foreign-funded enterprises have been newly set up, with a total realized foreign investment of 48.7 billion US dollars, increasing by 9.3% and 21% respectively, compared with the same period of last year.
Besides, China's service sector has become a hot spot of foreign investment. From 2002 to August this year, 17,351 foreign-invested enterprises were set up in China's service sector, with a total realized foreign investment of 33.4 billion US dollars, much higher than before.
Ladies and Gentlemen,
To encourage Chinese companies to invest overseas is also one of the major policies of China's open door policy. In recent years, Chinese enterprises have made big breakthrough in this regard. By the end of 2003, over 2,000 Chinese enterprises in the Mainland had set up 7,470 enterprises in over 160 countries and regions, and China's overseas direct investment has amounted to over 33.2 billion US dollars, which does not include overseas investment in financial sector. The industries of Chinese overseas investment have expanded from trade, shipping and restaurants to manufacturing, agricultural cooperation, exploitation of resources, project contracting, research and development, and many other areas. The investment modes have also diversified. As a developing country, China's overseas investment is not yet very big, only less than 1% of the world's total. But with the great support from the government, China's overseas investment will grow rapidly.
In recent years, the Chinese government has accelerated the promotion of regional economic cooperation and arrangements. Last year, the Central government signed the Closer Economic Partnership Arrangement (CEPA) with the Hong Kong and Macao Special Administrative Regions, which has quickened the liberalization of trade in goods and expanded the opening of over 30 service trade sectors. In addition, the Chinese government signed with Thailand an agreement on Early Harvest under the China-ASEAN FTA framework. Intensified efforts have been made in the negotiations and feasibility study with ASEAN, Australia, New Zealand, Chile and other countries and regions. As regional economic cooperation develops quickly, China will further deepen its trade and investment facilitation.
Ladies and Gentlemen,
During the past 2 and half decades, the living standard of the Chinese people has improved remarkably. In 2003, for the first time, China's per capita income exceeded 1,000 US dollars to 1,090 dollars, 6 times that of 1979. The rapid increase of per capita income of one fifth of the world population has generated enormous purchasing power and its potential is being continuously released. As a result, the scale of Chinese market has become one of the largest in the world.
The rapidly expanding and more liberalized Chinese market has injected new vitality into the world economic growth. Within 3 years from 2001 to 2003, China imported 1 trillion US dollars of goods, with annual growth of 22.4%. It is expected that during the period from 2004 to 2006, China's total import of goods will exceed 1.5 trillion US dollars.
China has set up the goal of building a well-off society in an all round way in the next 15 years. In 2020, its GDP is expected to exceed 4 trillion US dollars. The total retail volume of consumer goods will reach nearly 2.4 trillion US dollars, and annual imports will amount to about 1 trillion US dollars. At that time, China will possibly become the world's second largest market. To this end, China will face up to various challenges in a more active way. We are ready to intensify and expand the exchanges and cooperation with the rest of the world on the basis of equality and mutual benefit to push the wheels of economic globalisation running toward common prosperity. China, with 1.3 billion people, an economy in rapid and steady growth, will create numerous business opportunities for its partners, including OECD members.
Ladies and gentlemen,
China has been one of the largest destinations of foreign investment and will become an increasingly important source of investment outflow into the world. The Chinese economy is growing and the society is progressing. A more open China will be an excellent partner for all countries in the world. Interdependent, mutually beneficial and win-win economic and trade relationship will serve as a strong driving force for common development and prosperity on our planet.
Finally I wish the OECD Global Forum on International Investment 2004 a complete success!
Thank you all!