China 'most promising' in FDI (2)

After Chinese meat giant Shuanghui International Holdings Ltd proposed to buy Smithfield Foods Inc — the world's largest pork producer — a number of US senators urged the Obama administration to consider whether the proposed $4.7 billion deal, the biggest takeover of a US company by a Chinese firm, posed a threat to the US food supply that could justify blocking it.

Meanwhile, FDI inflows to China declined 2 percent year-on-year to $121 billion in 2012, second only to the US, while China remains the top investment destination for transnational corporations in the medium term, the report said.

FDI in China's non-financial sectors declined 3.7 percent year-on-year to $111.72 billion in 2012, according to the Ministry of Commerce, while the first five months of the year saw FDI inflow in China edging up 1.03 percent year-on-year to $47.6 billion.

"The structure of FDI inflow to China has changed following the country's economic restructuring and industrial upgrading," Zhan said. "Owing to rising costs in the eastern region, some investment and production activities are being transferred into inland areas and the share of the central and western regions in China's total FDI inflow rose from 12 percent in 2008 to 17 percent in 2012."

He added that some low-end manufacturing plants are moving to Southeast Asian countries with lower costs than China, while FDI inflow to China's high-tech and advanced manufacturing sectors is increasing rapidly.

"The total number of foreign research and development centers in China doubled in the past five years and reached 1,800 at the end of 2012. The quality and structure of China's FDI kept improving," Zhan noted.

Liang added that transnational corporations are increasingly attracted to China due to the country's huge market and fast economic growth, as well as the opening up of its services sector.

China's economic growth eased in recent months as the new leadership steered the country to a more balanced and sustained growth path. GDP in the last quarter of 2012 increased 7.9 percent year-on-year, and it slowed to 7.7 percent in the first quarter of the year.

"With the improvement in FDI inflow, China kept enhancing its participation in global value chains," Zhan said.

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