Flood of foreign funds to rust belt defended

PUBLISHED : Thursday, 17 June, 2004, 12:00am
UPDATED : Thursday, 17 June, 2004, 12:00am

Minister says leap in investments to Heilongjiang, Jilin and Liaoning is in line with rapid growth in the priority region

The Ministry of Commerce yesterday defended a huge leap in foreign investment to the northeastern provinces, saying the increase was in line with the region's pace of development.

In the first five months of the year, the rust-belt provinces of Heilongjiang , Jilin and Liaoning recorded year-on-year increases in actual foreign direct investment (FDI) of 28 per cent, 30 per cent and 43 per cent respectively.

Their growth is well above the national average of 11.3 per cent. Total FDI during the period stood at US$26 billion.

In terms of contracted investments, the growth was even higher - at 118 per cent for Heilongjiang, 138 per cent for Jilin and 58 per cent for Liaoning.

Vice-Minister of Commerce Ma Xiuhong said foreign investment in the rust belt was not excessive. The growth was commensurate with the rapid development in the region, she said. The central government has made redevelopment of the northeast an economic priority.

The growth in the northeast accounted for about 80 per cent of new investment, while that of the western region - which also suffered economic difficulties - was only 5.26 per cent.

Commenting on the overall FDI figures, Ms Ma said the growth in the first five months was healthy.

She reiterated the government's aim to sustain the current level of FDI growth for years to come, and stressed the need to continue to attract investment to the northeastern and western regions.

'Our challenges are many, but there are two primary ones,' she said. 'One is: how do we maintain our current scale and momentum in attracting FDI? Second, how do we create policies to attract FDI so that these investments best suit China's needs?'

While conceding that some sectors had grown too quickly, Ms Ma said the economy was growing well overall.

'Yes, certain sectors like steel and property are experiencing more production capacity than the market can bear. Our policies are aimed at these sectors, not the entire economy. Our policies are aimed at creating sustainable growth.'

On the controversy over investment from Taiwan, Ms Ma reiterated that businessmen with a pro-independence stance should stay out of the mainland.

'Don't come and invest on the mainland, where you make lots of money, and then go back and support independence in Taiwan,' she said.

'China's encouragement of Taiwanese investments hasn't changed,' she said. 'Taiwanese investors' rights will be protected, but pro-independence types, no matter who they are, we will oppose resolutely.'

Ms Ma was speaking at a press conference at the State Council to announce foreign direct investment statistics for the first five months of the year.