Economy

Foreign companies get boost in China

By Wang Bo (China Daily)
Updated: 2010-08-21 09:13

Latest directives 'alleviate worries' about Chinese business climate

Beijing - The State Council, the country's Cabinet, has said it will support companies listed in the Chinese mainland to rope in foreign strategic investors and broaden foreign companies' funding channels, amid complaints by foreign firms about the investment climate in China.

Qualified companies can also issue shares, corporate bonds and mid-term bills in the Chinese market, the State Council said in its latest directives facilitating foreign investments issued on Thursday.

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The move is seen as the latest gesture from the government to welcome foreign businesses, following a batch of new foreign direct investment development guidelines unveiled in April.

It is also expected to alleviate foreign worries that the business climate in China is becoming unfavorable to foreign enterprises, analysts said.

"China is in a critical period of transforming its economic landscape, which cannot be realized without foreign enterprises' participation, as they have been an important engine for the country's economic development in the past 30 years," said Li Xiaogang, head of the Foreign Investment Research Center at the Shanghai Academy of Social Sciences.

It is a win-win situation for foreign and domestic firms, as foreign companies whose finances are strained due to the financial crisis can get funded in the Chinese market where liquidity remains ample, Li said.

For domestic firms that are still struggling in the lower end of the industrial value chain, tie-ups with foreign companies are a good learning experience, he said.

Analysts said the latest directives will facilitate the flow of foreign investment into China and foreign investors will continue to play an important role in the country's economic restructuring in the coming decades.

During a meeting with German Chancellor Angela Merkel in July, Premier Wen Jiabao reiterated that China always welcomes foreign enterprises and will provide them with treatment equal to that of domestic companies.

Despite foreign accusations of China's challenging investment environment, the country's foreign direct investment continued to surge in July, up 29 percent from a year earlier. The increase showed that foreign investors are still keen about operating in China, one of the most vibrant economies in the world, analysts said.