According to China's plan of using foreign investment and making investment abroad for the period of 2001-05, China will channel a major part of foreign investment to its service sector instead of the manufacturing sector, which used to draw the largest amount of foreign funding in the past.

The State Development Planning Commission (SDPC) said China will introduce foreign funding mainly through foreign direct investment and other channels. The government will strengthen guidance of and supervision over foreign invested projects, instead of relying on administrative examination and approval to control such projects in the past.

The SDPC predicts that three areas -- government-encouraged industries, central and eastern areas of China, and transfer of advanced technology and management -- will see the fastest growth of foreign investment in the next few years.

According to the SDPC, China will encourage foreign investors to put their money in fields such as agriculture, high-tech industry, infrastructure and environmental protection. China will also encourage multinational companies to set up production bases in the country.

By gradually opening its service industry to foreign investors, China will focus on introducing advanced operational methods, management expertise and skilled professionals from abroad.

The SDPC said that China will allow a group of large state-owned enterprises (SOEs) to sell part of their shares overseas.

International companies will be allowed to own the majority shares of Chinese SOEs. Some of the SOEs will be selected for overseas listing.

China is planning to help a big number of foreign-funded enterprises establish themselves in western area of the country.

In the meantime, coastal areas in east China will upgrade the standards of technology and added value so as to create new competitive edges.

The SDPC said China will maintain the scale of using loans from international financial organizations and foreign governments in the next few years. However, it will use the money in a wider scope, including projects for infrastructure, ecological environment, poverty elimination and social development.

China will also keep the overall size of its foreign debt under control, SDPC officials say.

(China Daily December 25, 2001)