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China Daily Website

FDI increases as economy strengthens

Updated: 2013-10-17 23:10
By Li Jiabao in Beijing and Yu Ran in Shanghai ( China Daily)

Foreign direct investment in China maintained steady growth in September along with the pickup in the world's second-largest economy.

The country's FDI in September rose 4.88 percent from a year ago to $8.84 billion while the total amount of FDI in the first nine months stood at $88.6 billion, up 6.22 percent year-on-year, according to the Ministry of Commerce.

"China retains outstanding advantages in attracting foreign direct investment while global investors' confidence in the country has not changed," Shen Danyang, the ministry's spokesman, told a news conference on Thursday.

Wang Jun, an analyst at the China Center for International Economic Exchanges, said that the mild gain in the FDI figure in September was in line with the steady pickup of the country's economy.

The central government's supportive measures, which were released in the middle of the year, strengthened economic growth and won the confidence of investors at home and abroad. Pessimistic sentiment was pervasive after the country's GDP growth slid to 7.5 percent in the second quarter from 7.7 percent in the first quarter, Wang noted.

"The new leadership introduced a series of measures this year to facilitate foreign investment, including curbing approval procedures and streamlining registrations, which boosted foreign investment in China," Shen said. "The ministry is studying measures to further improve the management mechanism of foreign investment, which is set to create a transparent and level-playing environment for all market players."

The FDI from 10 Asian economies went up 7.47 percent year-on-year to $76.29 billion in the January-September period, about 86 percent of the total, while FDI from the United States rose 21.3 percent compared with last year to $2.88 billion. Investment from the European Union increased 23 percent year-on-year to $5.94 billion in the same period.

"The much-debated shift of manufacturing to other countries, in particular Southeast Asian nations, is not a reality for the majority of German companies. Increasing costs are certainly a major business challenge, but China remains an attractive market, in which German companies want to strengthen their position," said Max Zenglein, an economic analyst for Greater China at the German Chamber of Commerce in China. "The major concerns for the future are how to achieve productivity growth matching wage growth and deal with the skills mismatch, that is finding and retaining skilled employees".

"The full year will see steady growth of FDI, but the challenges confronting the country's economic growth, such as sluggish overseas demand and rising costs, will somewhat dent FDI inflow," Shen said.

Ge Shunqi, deputy head of the Institute of International Economics at Nankai University in Tianjin, said that China's attractiveness amid the lackluster global economic scenario is outstanding.

"The service sector outstripped manufacturing in using FDI in the past three years, a major improvement which will become more clear in the future as the government removes restrictions for the service sector," Ge said.

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