Long Yongtu, vice-minister of Foreign Trade and Economic Cooperation, who also led negotiations for China's World Trade Organization accession, said in his address to the 2002 Conference of Chinese Entrepreneurs that China will increasingly take advantage of its cheap labor to attract foreign investment.

Long said the conclusion was drawn from a research paper written by the Organization for Economic Cooperation and Development (OECD) which points out that China's labor force has two "incomparable" advantages.

Approximately 100 million persons in China's rural areas are "waiting" to be transformed into urban workers, according to the OECD paper.

The paper further explained that when the cost of labor in developed eastern China rises, investors will still be able to obtain cheap labor from less-developed central or western China.

Cheap labor will always be available from some part of the country, which makes China one of the world's major providers of cheap labor, the paper said.

Long stressed that China's labor force is not only cheap, but also of good quality.

According to official statistics, China produces 800,000 engineering graduates annually, which "lays a solid foundation for China to ensure the quality of its labor force", Long said.

Japan, China's richest neighbor, has 200,000 engineering graduates annually, and India, China's major developing neighbor, has only 80,000", Long added.

"The very nature of capital investment at the lowest cost determines where the money goes," Long said.

According to official statistics, during the past 13 years, actual overseas capital in China topped 400 billion US dollars, accounting for 97 percent of the total since the country initiated its reform and opening up policies in the late 1970s. Real investment and contractual capital from abroad reached 46.44 billion US dollars and 76.5 billion US dollars, respectively, for the first 10 months of 2002, up 19.65 percent and 34.87 percent from the same period in 2001.

"Just as water always flows to the lowest point, China is bound to be the first option for foreign capital investment", Long said.

(Xinhua News Agency December 21, 2002)