The three major indicators of attracting foreign investment have continued to decline for the first time in 12 years.

Recently, the Ministry of Commerce held a press conference to introduce the actual foreign direct investment (FDI) situation of 1-5 this year. According to reports, China's absorption of foreign direct investment has declined for eight consecutive months. This is the first time since the Asian financial crisis that the newly established foreign-funded enterprises, contractual foreign investment and actual use of foreign capital have seen a comprehensive and continuous decline.

Higher use of foreign capital in the central and western regions
From January to May this year, the actual amount of foreign investment in China was US$34.05 billion, down 20.4% year-on-year. The number of newly established foreign-invested enterprises was 7,890, down 33.8%. In May, the actual use of foreign investment was about 6.379 billion U.S. dollars, down 17.8% year-on-year; the country newly approved 1649 foreign-invested enterprises, down 32% year-on-year.

The actual use of foreign capital in the central and western regions fell more than the national average. From January to May, the central region fell by 35.7%, and the western region fell by 30.2%.

Yao Jian, spokesman of the Ministry of Commerce, said that the Ministry of Commerce and other relevant departments are studying the policy of stabilizing foreign investment, especially helping the central and western regions to absorb foreign capital.

Ensure that the export market share does not decline
From January to May this year, China’s total exports fell by 21.8% year-on-year. The Ministry of Commerce judged that the import and export are still in a low-level operation. Yao Jian said that the main task this year is to ensure that the export market share does not decline.

The Ministry of Commerce believes that the sharp decline in exports in May was mainly due to the shrinking imports from the US, Europe and Japan. In addition, the increase in business risk is also one of the reasons for the decline in exports. In order to improve the export credit insurance policy, the Ministry of Commerce will hold a deployment meeting with the National Credit Insurance System to nearly double the 2009 short-term export credit insurance underwriting scale to US$84 billion, increasing the export credit coverage rate from the current 6.5% to approximately 15%. The premium will be lowered by about 30% so that it does not exceed 0.45%.

In order to stabilize external demand, the state has once again raised the export tax rebate rate for some high-tech and labor-intensive products since June 1. Yao Jian said that in the first four months of the export tax rebate rate increased to 17% of mechanical and electrical products, the decline in exports was about 8%. In the first five months, the decline in clothing exports was about 8.1%, “it is much lower than the total export decline.”

He revealed that the export tax rebate rate raised on June 1 will increase the tax rebate of the central government by about 24 billion yuan in the next seven months, of which about 38% will be used for high value-added mechanical and electrical products. Yao Jian also revealed after the meeting that the Ministry of Commerce, the Ministry of Finance and other relevant departments are formulating policies to support the export of large-scale mechanical and electrical products.

There is still room to implement support for export policies.
In response to the financial pressure brought by the increase in the export tax rebate rate, Yao Jian said in response to a question from the reporter of "Daily Economic News" that the tax rebate did increase the state's fiscal expenditure. However, after the state's fiscal expenditures help the enterprises to survive the difficult period, the enterprises will further give back to the state and society and increase their fiscal revenue.

Yao Jian further stated that the export support policies introduced so far are strong, and there is still a lot of room for further implementation of these policies.

Regarding cross-strait economic and trade cooperation, Yao Jian revealed that in the first half of July, the second batch of delegations will visit Taiwan for exchanges and inspections; it is expected to further implement orders of about 1.4 billion U.S. dollars during the year.

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