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China official slams foreign investment spree
(Reuters)
Updated: 2006-03-07 22:09
"NO MORE PREFERENTIAL POLICIES"
For example, foreign companies had already taken a sizable share of China's
beer market -- Coca-Cola Co. had occupied much of China's drink market - while
many supermarkets had fallen into the hands of foreign ownership, he said.
Of multinationals that had already acquired Chinese firms, about 30 percent
were U.S. firms, 27 percent were from Europe and the rest came from Japan and
other Asian countries, he said.
Li said China must stop giving "preferential policies", notably tax breaks
that been used to attract foreign investors.
"We should grant the national treatment to both domestic and foreign
companies under the World Trade Organisation rules."
China's parliament said on Saturday it would consider a tax law to equalise
tax on local and foreign companies this year.
Many firms with foreign ownership in China enjoy preferential income tax
rates set by local governments as low as 15 percent, while domestic firms are
typically taxed at 33 percent.
China has been drafting a controversial anti-monopoly law for more than a
decade to contain domestic and multinational companies' market dominance, and
parliament said in December it would consider the legislation this year.
But multinationals and foreign business associations have voiced misgivings
about the law and and contend it could be used to force them to give up valuable
technology and markets.
China's accession to the World Trade Organisation in late 2001 cemented its
role as the workshop of the world, and foreign direct investment has since
poured in at the rate of $1 billion a week to take advantage of its cheap,
industrious labour.
In all of 2005, China drew $60.3 billion in actual FDI, just shy of the 2004
record of $60.6 billion.
Beijing faces persistent calls from Washington to let the yuan rise faster
since its 2.1 percent revaluation in July, largely because of China's large
bilateral trade surplus.
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