China Tries Guiding Foreign Investment
In the late 1980s and early 1990s, as China experienced booming annual growth rates of more than 10% and stepped up its move toward a market economy, billions of dollars of foreign investment went mainly into lucrative, short-term property development and fairly basic, low-technology manufacturing plants.
But the urban real estate sector has become thoroughly overheated. As a result of Beijing"s greater emphasis on managed investment, foreign investors will now be encouraged to move away from speculative property development and toward selected high-tech and infrastructure projects. Priority areas for investment would include the energy, transportation, telecommunications, biotechnology and environmental technology. Agriculture is also priority.
The total amount of foreign funds flowing into China in 1995 may not decline by much, analysts say, but foreign investors will find themselves asked to adjust their plans to fit China"s next five-year plan of economic reform, which begins in 1996.
Apart from channeling the flow of capital, the Chinese authorities are keen to reap benefits that go beyond money. They want more technology transfer, help in improving management at state enterprises and employee training.
"The bottleneck now is people, not technology, not capital, not bureaucracy," said one foreign investor. "That is why we invest in training of thousands of Chinese managers, engineers and skilled workers."Foreign investors went into property development for speculation.