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China will stay a magnet for foreign investment

By Leng Cheng | February 16, 2017, Thursday | Online Edition

CHINA will remain competitive on attracting foreign capitals for the year 2017 despite falls on both foreign direct investment (FDI) and outbound direct investment (ODI) in January on high base, the Ministry of Commerce said on Thursday.

FDI dropped 9.2 percent year on year in January to 80.1 billion yuan (US$11.68 billion) mainly due to the high base last year and the holiday effect of the Spring Festival, the ministry said. While January’s non-financial ODI dived 35.7 percent to 53.3 billion yuan largely due to plunged property purchases amid restrictions on capital outflows.

"The January data doesn't necessarily represent the whole year trend of FDI," said ministry of commerce spokesman Sun Jiwen, adding that China's economic growth is likely to keep above 6.5 percent during the 2016 to 2020 period, which will keep attracting foreign capitals.

China has pledged to further open up its economy to foreign investors, including allowing investment into previously restricted industries. Last year, FDI to China increased 4.1 percent on the year to 813.22 billion yuan, while December FDI rose 5.7 percent to 81.42 billion yuan.

"Although ODI dropped in January, the overall structure is improving," Sun added.

Supportive signs include more selective investment on strategic industries overseas in January. Investment in overseas manufacturing and information technology sectors rose 79.4 percent and 33.1 percent respectively, according to the ministry, while investment in offshore property fell sharply by 84.3 percent, investment in cultural, sports and entertainment industries declined 93.9 percent.

Infrastructure projects in countries alongside the "Belt and Road" initiative were actively invested by Chinese companies, Sun said, with 10.6 percent of January's non-financial ODI flew into those projects.

A recent PwC China report said that power, rail and healthcare are among the most significant growth sectors along the countries involving China's "Belt and Road" initiative in the year 2017.

"Power consumption is trailing gross domestic product per capita in a number of key Belt and Road middle-income countries," the report said. "We see a significant ramp-up in power projects in 2017 and beyond as governments seek to bridge the supply gap."

Last year, the country’s ODI surged 44.1 percent year on year to a record high of 1.13 trillion yuan.

Economy


 

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