China will invest USD3 billion in a special economic zone in northeastern North Korea to build an airport, a power plant, a cross-border railway and piers in the Rason economic zone bordering China and Russia by 2020. In return, China had secured the right to use Rason port for 50 years. A 55-km cross-border railway track will connect Rason with the Chinese city of Tumen. The use of piers at Rason gives China’s northeastern provinces direct access to the Sea of Japan. China had lacked such access for 150 years, since it signed a treaty ceding part of its coastline to Russia and leaving its northeastern part landlocked. The new arrangement reduces logistical costs for Chinese shipping. Total accumulated foreign investment in North Korea reached USD1.475 billion in 2010, up from USD1.437 billion the previous year, according to the United Nations Conference on Trade and Development (UNCTAD).

Beijing has vowed to transform Fujian’s underdeveloped Pingtan island into a “Little Taiwan” by inviting Taiwanese to join its management team, as well as allowing the circulation of the Taiwanese currency and offering income tax reductions for those working there. Pingtan is the closest mainland territory to Taiwan – only 126 kilometers away – and has been given  approval to attract Taiwanese and their investments. The island also wants to recruit 1,000 Taiwanese experts within five years, with salaries and benefit packages “higher than Taiwan’s standard” and with income tax cut to the same level as in Taiwan. The Governor said Fujian was considering providing land on 372 square kilometer Pingtan to Taiwanese city or county authorities or institutions to develop, and Taiwanese would be given the right to manage such land and enjoy the revenue produced. Deputy Governor Chen Hua said Taiwanese television channels would be able to broadcast on the island once approved, and newspapers and books published in Taiwan might be allowed to circulate. But Hsieh Ming-hwei, Deputy Secretary of the Taipei-based Taiwan Competitiveness Forum, said Taiwan had strict laws prohibiting its people from working for the mainland government. Joint development of Pingtan was wishful thinking by the mainland authorities, he said.

Foreign direct investment (FDI) in China fell for the third straight month in January as European investment continued to plunge. Foreign investment totaled USD9.99 billion, 0.3% less than the same month last year, the Ministry of Commerce (MOFCOM) said. That was an improvement on December’s reduction of 12.7% and November’s 9.7%. The European Union placed USD452 million in China last month, down 42.5% from a year earlier. Investment from the U.S., however, jumped 29% annually to USD342 billion, a reversal of the previous year’s drop of 26%. Foreign investment in China’s manufacturing sector lost 0.04% from a year earlier to USD4.7 billion in January, while that in the service industry fell 4.62% to USD4.5 billion. Part of the rise in U.S. investment is due to investment in Shanghai Disneyland. The first phase of the park will cost CNY24.5 billion and an additional CNY4.5 billion will be spent on building support facilities. China was ranked as the most attractive FDI destination among developing nations for almost two decades. Last year, the nation’s FDI set a record high of USD116 billion. The U.S. remains a major source for FDI. By the end of last year the accumulative FDI absorbed from the U.S. reached USD67.6 billion. A report by the U.S. Chamber of Commerce in China said that 80% of the American enterprises interviewed said they plan to increase investment in China this year. The figure was 75% for 2011.

Foreign companies won’t be forced to transfer technology to ventures with their local partners in order to gain access to markets in China, Commerce Minister Chen Deming said. “Technology transfer and technology cooperation shall be decided by businesses independently and will not be used by the Chinese government as a precondition for market access,” he added. Minister Chen said that China had reviewed all its laws governing foreign trade and economic issues shortly after joining the World Trade Organization (WTO) in 2001 and “revised those not conforming to WTO rules and its accession commitments.” His comments were made ahead of Vice President Xi Jinping’s visit to the U.S. this week. “As the financial crisis is spreading and worsening, all countries are faced with the task of promoting economic growth and creating more jobs,” Chen said. Stronger cooperation between the U.S. and China is in the fundamental interest of both nations, he said.

In an amendment to foreign investment rules, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM), have re-categorized villa construction and management from “restricted” to “prohibited”. The change, contained in the revised Catalogue of Industries for Guiding Foreign Investment (2011 Amendments), means that foreign investment in this type of real estate business is banned in the future. But in the absence of a clear definition, there is no certainty in the property industry about what qualifies as a villa. In the past, the central government appeared to have accepted the concept that a villa meant a single detached court villa, global law firm Mayer Brown noted in a commentary on the revised catalogue. This indicated that any semi-detached villa, townhouse, overlapped villa or penthouse might not be categorized as a villa real estate project. However, the Ministry of Land and Resources is considering an official definition of the term “villa” that might embrace semi-detached villas or townhouses, thus banning foreign investment in such “quasi-villa” projects. The impact of the rule change is expected to be limited as the prohibition of any land supply for villas has been provided for in various rules since February 2003. Law firm Morgan Lewis said the revisions showed the central government’s increasing desire to encourage foreign investment in high technology, high-end manufacturing, clean energy, energy saving, environmental protection and modern services.