Foreign investment pours into city

PUBLISHED : Tuesday, 08 October, 2002, 12:00am
UPDATED : Tuesday, 08 October, 2002, 12:00am

Shanghai's contracted foreign investment hit a record high for the first nine months of this year, surpassing last year's total, as overseas companies committed funds after China's World Trade Organisation entry.

China joined the global trade body last December, throwing open its tightly guarded markets.

Contracted foreign investment - an indicator of the future trends - surged 37.6 per cent year on year in the first nine months to US$8.03 billion, Shanghai media reported. Contracted foreign investment was US$7.37 billion last year, according to official statistics.

The local government approved 2,245 new projects with foreign investment during the first nine months of this year, up 21.7 per cent, the reports said.

Investment in property was among the most popular sectors, rising nearly twofold to US$1.1 billion - about 14 per cent of total contracted foreign investment. Overseas Chinese investors have bought into the Shanghai property in hopes of speculative gains from the booming mainland economy.

Foreign investment in tertiary industry, which includes services, also had strong growth, rising 85.31 per cent to US$2.78 billion.

Shanghai approved 170 large projects with foreign investment of more than US$10 million in the first nine months, up 33.9 per cent. These projects accounted for US$5.7 billion in investment, a rise of 36 per cent from the same period last year.

The single biggest source of foreign investment was the Virgin Islands with US$1.53 billion, the media reported. Investment from Taiwan is often funnelled through a third location because of a ban on direct investment between the island and the mainland.

Foreign investors also use offshore investment vehicles outside their home countries for tax purposes.

Hong Kong followed as the second-biggest overseas investor with US$1.28 billion and Japan with US$1.1 billion.