| China's Policy on Absorption of Foreign Fund Irreversible |
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| Friday,September 21,2007 Posted: 16:10 BJT(0810 GMT) |
| From:MOFCOM Article type:Reproduced |
Minister Bo Xilai reaffirmed China's welcome to foreign fund at dinner of 2007 China Development Forum on March 18, and said that China's policy on absorption of foreign fund was irreversible.
The enterprise income tax law, which was voted through on the 5th Session of the 10th National People's Congress, caused doubt from all sectors, especially foreign investors, on China's policy on foreign fund. China's Development Forum is a platform for carrying out dialogue among China and foreign entrepreneurs, scholars, experts, and officials of international organizations and China government. Minister Bo's presentation will bring confidence to foreign enterprises.
Bo expressed that, since opening up, China's absorption of foreign fund increased by a large margin annually totaling 700 billion USD which presented a magnificent progress in China's economy. China's economic community and common people all agreed on it. According to Comrade Deng Xiaoping, there was no change in China's economic opening up to the outside in 50, or 70 years, more opening shall be the change if there was. He believed China did not over absorbing foreign fund currently and needed to continue the absorption with an improved quality. In 2006, absorption of developed countries reached 800 billion USD, accounted for over 65% of global multinational direct investment, out of which the US topped the most absorption country with 177.3 billion USD. China's absorption reached 69.5 billion USD in the same year, accounted for 6%.
As for the great concerns on the merging of two income tax laws into one, Bo believed that China uniting income tax was in conformity to WTO general principle and benefited for setting up united, fair and justice tax system. Although some foreign investors' income tax raised from 15% to 25%, the new tax law impose 15% tax rate to high-tech sectors, and 20% preferential tax rate to medium and small enterprise with small profit, and so on. All these indicated that the policy was stable and caused no strong impact on the investors.
As for China's trade surplus, Bo expressed that the Ministry would reduce it from 3 aspects: 1, expand import and provide more convenience to foreign goods imported to China; 2, reduce export, for instance adjusting policy on processing trade; 3, enlarge domestic need, the basic strategy, meanwhile foster and expand domestic market. Bo believed that expansion of domestic market would greatly reduce the pressure of China's export.
In the opening up of service, Bo believed that China fulfilled its WTO's commitment on service industry. Among 160 service trade categories registered in WTO, there are 108 from developed country and 54 from developing country. China's opening up of service trade exceeds 100. There were 7,129 foreign funded enterprises set up in China's service industry in 2006, with 14.7 billion USD of actual use, up by 25.8% year-on-year. Absorption in finance industry amounted to 6.45 billion USD. China would perfect industry guiding index for foreign investors, encourage them to set up logistic, finance, and operating center, vigorously undertake international outsourcing of service, encourage them to develop productive service industry in central and west China. At the same time, the Ministry would actively boost trading and investing convenience in service industry with relevant departments and boost transparent policy.
(Source: Network Center of MOFCOM)
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