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Chinese ventures for FDI, exports are worth emulating, Assocham tells govt

The Associated Chambers of Commerce and Industry of India has suggested establishment of free trade zones, conversion of existing export processing zones into FTZs and encouragement to foreign direct investment particularly in export enterprises.

In a paper on ''Exports Scenario -- Lessons from China'', the Assocham suggests a serious relook at the labour legislation in the context of FTZs so that all employees in these zones may be eligible to earn salaries in dollars.

Moreover, all products manufactured there must be dutiable at normal rates on the lines of Chinese special economic zones, the chamber said.

The paper says, ''In 1970, the quantum of exports from India ($ 2 billion) and China ($ 2.30 billion) were virtually identical; however, in 1998-99, India's exports were $ 34.5 billion as against China's exports of over $ 190 billion.

The paper reveals that China had attracted heavy FDI of about $ 270 billion since 1978. This has helped establishment of 120,000 100 per cent foreign enterprises or joint ventures.

In 1998 alone, China attracted FDI of over $ 45 billion. The total FDI has directly generated 47 per cent of the exports and 37 per cent of the total industrial output of China.

The total FDI has directly generated 47 per cent of the exports and 37 per cent of the total industrial output of China. Of the $ 182 billion expected from China in 1997, as much as $ 81 billion resulted from 100 per cent foreign enterprises.

Interestingly enough, even when China's rate of increase in exports last year slipped by seven per cent, exports by foreign-owned enterprises increased by eight per cent.

Another very important factor in the success of China is the scale and magnitude of their free trade zones, which are referred to by them as special economic zones. The five largest such zones in China -- Shenzen, Zhuhai, Santou, Ziamen and Hainan -- exported $ 26 billion in 1994, almost 22 per cent of the total exports.

India does not have any free trade zones today. There are only seven ''so-called'' export promotion zones. The total exports from all these zones were valued $ 1.2 billion in 1997-98.

The special economic zones in China are large in terms of size. The special economic zone in Pudong alone is spread over an area of 130,000 acres, and has attracted $ 9 billion of external investment.

The Chinese government has spent $ 3 billion in the infrastructure alone in Pudong. However, with 93 acres in SEEPZ, the most successful EPZ in India, it exported approximately $ 0.6 billion in 1997-98.

Another major contributor to China's success is its investment in the infrastructure. China is committed to spending $ 744 billion in infrastructure in 1995-2004 as against the provision of $ 14.2 billion proposed to be invested in infrastructure in India, in the Union Budget of 1999-2000.

UNI

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