The country does not face an imminent risk of monopoly by foreign companies in any industry, according to the China Foreign Investment Report 2007 released by the Ministry of Commerce.

Wang Zhile, director of the Multinational Enterprise Research Centre affiliated to the Ministry of Commerce, made the observation in an essay for the report in response to people's rising concerns about possible foreign monopolies in the country.

He explained that although foreign investors do have a large market share in certain industries, it does not necessarily mean monopolies.

The market share is usually held by different foreign-funded enterprises that compete with each other and those who have a large share do not use it to restrain competition in the market, which is the nature of a monopoly.

China had approved the establishment of more than 610,000 overseas-funded companies by the end of July, with actual use of overseas investment totaling US$720 billion, a Ministry of Commerce official said yesterday.

The report was released in Xiamen, Fujian Province, yesterday during the China International Fair for Investment and Trade (CIFIT) along with a series of booklets introducing Chinese provinces and cities to potential foreign investors, and guidelines for Chinese enterprises' outward investment.

Policy revisions

In a related development, Zhou Xiaochuan, governor of the People's Bank of China, told the main CIFIT forum on Saturday that the country is likely to adjust its financial polices to support Chinese companies' outbound investment.

Revisions will be made to the current foreign exchange policies that encourage currency inflows while limiting outflows, he said.

The central bank will further develop the foreign-exchange market to help companies hedge currency risks and simplify procedures for companies investing outside.

"We will remove unnecessary controls on reviewing sources of foreign-exchange funds and on foreign currency purchase and remittance procedures to allow companies to use their own funds or converted currencies to invest abroad," Zhou said.

The government also encourages qualified commercial banks to set foot abroad by establishing branches or acquiring stakes in overseas counterparts, he said.