China defends business environment

China defended its business environment yesterday, saying it was more open to foreign investment than many countries as fears grow among overseas firms that Beijing is becoming more discriminatory.

"China is very competitive in attracting ... foreign investment compared with other countries in the world," Zhang Xiaoqiang, vice-chairman of the National Development and Reform Commission, the nation's top economic planning agency, told reporters.

His comments came as China announced foreign direct investment rose 7.7 per cent on-year to $23.4 billion in the first quarter, signalling growing confidence in the outlook for the world's third largest economy.

In March alone, total foreign investment rose to $9.38 billion from $5.89 billion in February, based on AFP calculations. Despite the investment figures, foreign firms have become increasingly concerned about doing business in China.

A recent survey by the American Chamber of Commerce in China showed a growing number of US firms felt unwelcome in the Asian nation because of what they saw as discriminatory policies and inconsistent legal treatment.

Respondents said new procurement rules announced in December had squeezed foreign technology companies out of the multi-billion-dollar market for selling computers and office equipment to government departments.

These concerns have been echoed by European business leaders, who also say the investment environment in China has been soured by an opaque judiciary and inadequate protection of intellectual property. Mr Zhang rejected the concerns, pointing out that transnational direct investment worldwide had fallen by 40 per cent during the financial crisis, whereas foreign investment in China in 2009 was down just 2.6 per cent.

"This was in sharp contrast with the global picture and it is evidence for the sound investment environment," he said.

However, he admitted problems still remained in China's business environment, and pointed to a draft of new rules issued at the weekend that could ease restrictions in the area of government procurement.