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Over the past five years, China fulfilled its WTO commitments regarding the opening of the service industry. So far, there were over 100 service sectors opened to the outside. Foreign investments in various service sectors have been growing fast.
By the WTO’s industry classification standard, in the trade in services sector (including bank, insurance, securities) there were 7,141more foreign-funded enterprises established in China, down 4.3% over 2005, which accounted for 17.2% of foreign-funded enterprises newly established in China, up 0.3 percentage points over 2005. Paid-in foreign investments in the services sector totaled USD 21.14 billion, an 11% year-on-year decrease, having a 30.4% share in China’s paid-in foreign capitals, up 11.1 percentage points over 2005. Of which, in the non-financial service sector there were 7,129 more foreign-funded enterprises established in China, a 4.2% year-on-year decrease, and paid-in foreign investments mounted to USD 14.69 billion, a 25.8% year-on-year increase, having replaced the minus figure of -4.5% in 2005.
In 2006, China’s service sectors that received foreign direct investment featured the following:
1. Paid-in foreign investments in the financial sector falling drastically
In 2006, in the financial sector ( including bank, insurance, securities) there were 12 more foreign-funded enterprises (Joint venture bank, insurance company, funds management company) established in China, with the paid-in foreign investments of USD 6.45 billion, down 33.3% and 46.6% over 2005 respectively.
2. Foreign investments in the non-financial sector varying
Firstly, paid-in foreign investments in the real estate sector increased considerably, and this was a sector with the largest foreign investments in the service industry. In 2006, in this sector there were 2,410 more enterprises established in China, up 14.1% over 2005, with the paid-in foreign investments of USD 8.23 billion, a 52.7% year-on-year increase. Their shares in the total foreign direct investments in China’s service industry were 33.7% and 38.9% respectively, making real estate a sector with the largest foreign investments among services sectors.
Secondly, paid-in foreign investments in rental and leasing, hotel and civil aviation sectors grew rapidly. In 2006, the paid-in foreign investments in China’s rental and leasing sector amounted to USD 70 million only, up 84.7% over 2005 however, making it a sector with the fastest growth in foreign investment. The paid-in foreign investments in the civil aviation sector reached USD 139 million, a 76.5% year-on-year increase.
Thirdly, foreign investments in recreation, culture and sports sectors fell drastically. In 2006, in recreation, culture and sports sectors there were 223 more enterprises approved and established in China, an 11.5% year-on –year decrease, with the paid-in foreign investments of USD 230 million, a 23.7% year-on-year decrease.
According to a preliminary estimation, in 2006 the sales revenues within China by non-financial foreign affiliates in China totaled USD 91.32 billion, a 23.5% year-on year increase. In 2006, the foreign affiliates in China’s non-financial service industry numbered 44,128. In the wake of the development of china’s economy and huge domestic market, the service industry will become more appealing to foreign investors, leading to an expanding scale of commercial presence in China.
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