China sets plan to halt further decline in FDI

China's Commerce Ministry has submitted a proposal to the state council pleading for top authorities to take measures to stop foreign investment from sliding further, local media reported yesterday.

Foreign direct investment (FDI) has seen sharp falls for the eight months since October as investors tightened purse strings in the face of the global economic crisis.

Worrying about a further slump in FDI, which is an important source for jobs, investments and taxes, the Commerce Ministry recently drew up a plan to relax rules on foreign investment, reported the Beijing-based China Times, citing an insider from the ministry.

The plan, listing 42 rules covering tax, foreign exchange, other regulatory supervision, was submitted to the state council, or the cabinet, for approval, reported the paper. In the plan, the Commerce Ministry suggests giving foreign investors access to China's high-tech industry and to further relax checks on individual foreign investment, said the paper.

It also recommended loosening regulations on foreign investment in the property sector. In June 2007, the ministry issued new rules making it harder for foreigners to invest in property, partly by making them obtain land use rights before developing projects. It also banned foreign investors in Chinese real estate from borrowing offshore.

China's cabinet in 2006 approved rules restricting purchases of property by foreigners in a move to prevent foreign speculators from cashing in on China's red hot property market.

China drew $34.05 billion (Dh125bn) in FDI in the first five months of the year, 20.4 per cent less than in the same period in 2008.

 

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