Import of capital into China

China is one of the largest powers of the world. Over 21% of a world’s population lives on its territory. The economy of the People’s Republic of China is characterized by steadily high rates of development. The impressive gains, which are made by China during the period of economic reforms (from the late 70’s.), have attracted worldwide attention.

An integral part of the strategy is the transformation of Chinese policy of openness to the outside world. Reasonable protection on the national production is an integral part of the industrial policy of China. In the American chamber of commerce in China note that decrease in customs tariffs and access opening on the financial market and to other spheres became important indicators of a responsible approach of the Chinese government to implementation of the obligations. Supervised “openness of economy” showed the advantages in the conditions of the crisis phenomena in the financial sphere of the world economy. The structure of inflow of the capital and external debt in the field of attraction in economy of the People’s Republic of China of the foreign capital of achievement of policy of openness are indisputable.

General characteristics of China’s economyAccording to the State Statistical Bureau of China, in the first half of 2013, China’s GDP reached 24.8 trillion yuan / 4.04 trillion USD / – 7.6 percent more than the same period in 2012. In the second quarter of this year, China’s GDP growth was 7.5 percent compared to the same period last year. This figure is the lowest since 1999. According to the ministry of commerce of the People’s Republic of China, the volume of direct foreign investments in the Chinese economy in October of this year made 8,416 billion dollars that is 1,24 percents higher than an indicator for the similar period of last year. The economy of China giving absolutely multidirectional signals within the last four months, was more or less stabilized, especially if to consider reports on levels of business. According to the International Monetary Fund, within 30 last years average growth rates of gross domestic product in China exceeded 10% a year. Grossdomestic product per capita increased from 200 dollars in the early eighties to 6000 dollars in the 2012th – taking into account parity of the purchasing power, taking into consideration price level in China and in all other countries. Income of Chinese thus grew even quicker and today makes about 9000 dollars per capita. For comparison: Gross domestic product of China per capita is equal today to about a third of the Israeli indicator and is close to gross domestic product of Israel per capita in the 80th years. However forecasts of economic growth were modified recently towards fall and today 7.5% both for the 2013th and for 2014 are equal. Even more often fears that proceeding weakness of world economy eventually will be reflected and in the Chinese economy express, is stronger than many others depending on a situation in the world. Besides, signs of increase of system credit risks are multiplied.

II Import of capital into China1 Import of capital

For activation of process of economic development of the People’s Republic of China the importance is given to attraction of the foreign capital which total amount for 1979-2009 made nearly $1 trillion. Since the middle of the 90th of the People’s Republic of China is one of the world’s largest recipients of the foreign capital. The reasons of high receipts of foreign investments into the People’s Republic of China are well-known: 1 . maintenance in the country of high level of social and economic and political stability; 2 . existence of capacious domestic market and cheap labor;

3 . carrying out active national investment policy;4 . continuous improvement and liberalization of legal base in the direction of creation of a favorable mode for the foreign companies. Additional dynamics to inflow of foreign investments is given by the various regional and international events held in the People’s Republic of China from which Olympic Games of 2008 in Beijing and the World Fair Expo-2010 in Shanghai especially are distinguished.

Attraction and use of the foreign capital in the People’s Republic of China is regulated by the special catalog of branches for foreign investments. So, according to the catalog, more than 260 directions belong to category of encouraged branches for foreign investments into the People’s Republic of China. Branches in which placement of foreign investments is forbidden, now are: the military sphere, the mining sphere, melting and processing of radioactive ores, construction and operation of power supply networks, production with cancer genic, teratogens, mutagen action and making long organic pollution, transport services, masses – media and mass media, and also financial sector (bank activity, operations with securities, establishment of the accounting and trust companies, insurance broker companies) and certain spheres of the food industry. Except above-mentioned fields of activity in which use of the foreign capital is limited, are: insurance, real estate, legal consulting, tobacco and pharmaceutical industry and telecommunication services. Over 70% of the realized investments represent the credits and loans.

The considerable share of the credits obtained from the international financial organizations, is the share of World Bank which China entered in 1980 at the same time with the accession to the International Monetary Fund. To China the credits provided by structural division of the World Bank — the International association of development were most favorable. All credits of this association are interest-free (the commission of 0,75% per annum is raised only).

They are provided for 50 years with a ten-year grace period. About 40% of total amount of the credits obtained by China from World Bank are the share of the credits through the International association of development. In recent years process of use of forms of accumulation of investment resources new to China, such, as issue of bonds of the state loans, actions of the enterprises, bonds of local authorities, banks, other credit institutions became more active. Trade in securities is carried out through stock exchanges. Now they act in Shanghai and Shenzhen. Bidders can be either specialized firms, or the enterprises which have got special permission of the State Council of the People’s Republic of China.