BEIJING, Dec. 28 (Xinhua) -- Some international analysts speculated in 2006 that China would tighten foreign investment controls, but the Chinese government insists that it is doing the exact opposite.

    The China Banking Regulatory Commission (CBRC) announced on Sunday it had approved applications from nine foreign-funded banks to transform their Chinese branches into locally incorporated banks registered on the mainland. The move is seen as proof that the government is fulfilling its commitments to greater flexibility in the financial sector.

    The nine banks, all to be registered in Shanghai, are the Standard Chartered Bank, the Bank of East Asia, the Hong Kong and Shanghai Banking Corp., the Hang Seng Bank, the Mizuho Corporate Bank, the Bank of Tokyo-Mitsubishi UFJ, the DBS Group, Citibank and the ABN Amro Bank.

    The announcement followed the promulgation of new regulations on the administration of foreign-funded banks that took effect on Dec. 11, the fifth anniversary of China's accession to the World Trade Organization (WTO).

    Under the regulations, China will allow foreign-funded banks to conduct Renminbi business for Chinese citizens in line with its commitments to the WTO.

    NO OPTION BUT TO OPEN UP

    The foreign investors that arrived in China after the country began to open its doors nearly 30 years ago have now ventured out from the east coast to the hinterland and westernmost regions. Foreign funds have poured into a range of sectors, including high-tech, services, trade and banking.

    Seven strategic sectors -- which include armaments, power generating and distribution, oil and petrochemicals, telecommunications, coal, aviation, and shipping -- remain only partially open to foreign investors.

    State capital must play a leading role in these seven sectors, which are the vital arteries of the national economy and essential to national security, according to the State Assets Supervision and Administration Commission (SASAC).

    Certain sectors -- such as national defence -- remain closed to foreign investors.

    According to Ministry of Commerce figures, China used 48.576 billion U.S. dollars of foreign investment in the first ten months of the year, up 0.34 percent year-on-year. The country used 5.987 billion U.S. dollars in October alone, up 15.92 percent on last October.

    At the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Hanoi in November, Chinese President Hu Jintao said China would continue to reform and upgrade its economic system and open the country to the outside world.

    Premier Wen Jiabao has said that just as the world needs China's dynamism and manufacturing strength, so China needs the outside world to develop, modernize and innovate.

    Foreign media speculated that Hu and Wen's remarks were intended to ease foreign investors' anxiety. Now that its economy, the fourth largest in the world, is largely globalized, China has no option but to engage with international markets, increase direct foreign investment and develop advanced technologies. By doing this, China will be able to solve its domestic problems, including unemployment, wasteful growth that comes at a very high cost in environmental degradation and decreasing economic competitiveness.