Editorials

Heaven for all investors

(China Daily)
Updated: 2010-04-15 08:20

Editor's note: New rules released by the State Council show that China is still an "investor heaven" for foreign companies only if they brace for tough competition.

Complaints from a few foreign businesses about China's investment climate indicate that the largest developing economy is not yet a heaven for investors, at least according to their expectations.

But new rules released by the State Council on Tuesday to "make good use" of overseas investment show that the Chinese market can be a better place for all kinds of investors only if they brace for intensifying competition.

The new regulations welcome foreign investment in the high-tech, services, energy-saving and environmental protection sectors. But polluting and energy-intensive projects or those in industries running at overcapacity are not wanted. Qualified foreign-funded companies will even be allowed to go public, issue corporate bonds or offer medium-term bills in China.

Such a fresh effort by the Chinese government to improve investment conditions for foreign companies is in sharp contrast with recent criticism that the country is shutting its doors to foreign investors.

Foreign-funded companies have played a major role in China's remarkable growth over the past three decades. Yet, as the Chinese market transforms and thrives, it is natural for some foreign investors to stand out and others to recede into the background.

Less fortunate ventures by a number of multinationals in the booming Chinese market do not necessarily point to a deterioration in the country's investment environment.

Think about some of the winners in this respect. After first-quarter Chinese car sales rose 76 per cent from a year earlier to 3.52 million units, automobile giant General Motors raised its forecasts for car sales in China. It expects to hit its target of 2 million sales in China this year, four years ahead of schedule.

As a fast-growing developing economy, China still has a lot to do to make its investment environment more predictable for investors from home and abroad. But even in an "investor heaven", tough competition among local and multinational players is the norm, not the exception.

(China Daily 04/15/2010 page8)