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New Policy Stresses Quality of Foreign Investment

The Chinese government Thursday published its 11th five-year-plan (2006-2010) for utilizing foreign investment, which says priority will be given to the quality rather than quantity.

The National Development and Reform Commission published the document on its website, the first time such a document has been published.

"This is an important measure taken by China in making a stable and transparent foreign investment management system as well as a fair and predictable policy environment," the NDRC said.

According to the document, China utilized US$383 billion of overseas investment during the 10th five-year-plan period (2001-2005), including US$286 billion in overseas direct investment, US$38 billion in stock issuances and US$46 billion in foreign loans.

It criticizes some local governments for their unquestioning encouragement of foreign investment, often in contravention of the central government's industrial policy.

The document notes that emerging monopolies by foreign businesses in certain industries are posing a potential threat to China's economic security.

The document says policy priority will shift from the quantity to the quality of foreign investment during the next five years.

Priority shall be given to the introduction of advanced technologies, management expertise and skills, rather than the use of foreign capital, the document says.

More emphasis shall also be given to the protection of environment and efficient use of natural resources, it says.

The document stresses the need for more foreign investment in areas such as research and development as well as sophisticated design, so that China could eventually become a major manufacturer of high value-added products, mainly high-tech products.

It also calls for more foreign investment in China's remote west and the northeast rust belt, which are currently lagging far behind the coastal regions in attracting foreign investment.

Despite the stress on quality, the document says the government expects foreign investment to keep rising in the next few years.

(Xinhua News Agency November 9, 2006)

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