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East’s best for foreign direct investment
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CHINA’S eastern and coastal areas lead the way in attracting foreign direct investment, the Ministry of Commerce said yesterday.
The first eight months saw an increase of 9.2 percent to 525.3 billion yuan (US$85.3 billion) compared to the same period of last year, with 16,827 new foreign-invested firms established.
Eastern areas attracted the bulk of FDI —US$72.3 billion, a rise of 12.1 percent on an annual basis.
In contrast, investment in central areas was down 4.3 percent in the January-August period, while that in western areas contracted 9.1 percent.
Li Maoyu, an analyst at Changjiang Securities Co, said China’s eastern areas had attracted foreign investors with their resilient performance in an economic slowdown.
Lian Ping, chief economist at Bank of Communications, said pilot free trade zones, all in eastern and coastal areas, were also responsible for increased interest.
In the past year, three more free trade zones were set up in China and the idea of making them a testing ground for opening-up policies became more familiar to investors.
The latest figures show that Shanghai’s contracted foreign direct investment jumped 1.13 times to US$43 billion in the first eight months, mainly driven by funds injected into its pilot free trade zone, the first to be established in 2013.
Shen Danyang, a ministry spokesman, said China’s foreign direct investment remained stable and with better quality as more funds were flowing into the service sector. In the first eight months, US$51.9 billion, a rise of 20.1 percent, was channeled into the service sector, 60.9 percent of the total. Capital for high-tech services rocketed 59.1 percent.
Meanwhile, investment in manufacturing fell 1 percent to US$27.2 billion during the period, or 31.9 percent of the basket.
But foreign input in advanced manufacturing bucked the trend. Funds flowing into high-tech manufacturing grew 9.9 percent, with foreign investment in telecom equipment manufacturing nearly tripled during the January-August period.
The European Union directed US$5.1 billion into China in the first eight months, up 14.4 percent year on year. But the United States slashed its investment by 19.6 percent to US$1.7 billion, partly due to a high comparative base. Investment from Japan also contracted 28.8 percent to US$2.3 billion.
“Some countries have not been able to adapt quickly to China’s investment restructuring based on the fast economic restructuring, or they have not found the best investment candidates in sectors like services,” Shen said.
In August, China’s FDI expanded 22 percent to 54.2 billion yuan, up from the increase of 5.2 percent in July and June’s 0.7 percent, the ministry said. Industry leaders, including Volkswagen, Audi and Daimler, were among those who added to their investment.
On Tuesday, President Xi Jinping said China’s economy must open wider to the outside world to fuel growth. China should be committed to attracting foreign investment and expertise, Xi said, promoting a series of guidelines including the negative list regulating market access and relaxation of border-control policies.
Last year, China absorbed US$119.6 billion in non-financial foreign investment, up 1.7 percent year on year, helping it surpass the US as the world’s top destination for foreign investment.
China’s outbound direct investment rose 18.2 percent to US$77 billion in the first eight months, with funds flowing into 4,862 overseas companies.
In August, outbound investment added 7 percent to US$13.5 billion, reversing the contraction of 18.6 percent in July.
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