Investing in China, Part II: Vibrant Opportunities amid Transition

China still remains a top destination for FDI. (Photo/China Daily)
Bloom amid the Gloom

Amid its current economic transition, China has become comparatively even more appealing to global investors, despite the country's rising labor costs and the downward trajectory of global economy.

Although FDI inflows to China in the first half of this year declined 3 percent from that in the same period of last year, the $59 billion FDI inflows in the first six months has made China, for the first time since 2003, surpass the United States to become the world's largest recipient of global FDI.

Even during the height of the financial crisis, China had experienced the smallest decline in foreign investment.

In 2010, transnational investment in the developing countries fell by 35 percent. The decline in Brazil and India was 50 percent and 19 percent, respectively. FDI in the United Kingdom went down by 93 percent. In the United States and Japan, the figures were 57 percent and 53 percent, respectively.

However, FDI inflows to China in the same period only dropped 2.6 percent.

A poll conducted in early 2012 by the American Chamber of Commerce in Shanghai showed that 77 percent of the companies surveyed planned to increase investment in China.

A recent survey by the European Union Chamber of Commerce in China found that three quarters of the EU companies polled listed China as the world's top three investment destinations, and 63 percent planed to expand their investment in China.

Since the release of China's new opinions on foreign capital utilization that set guidelines on the structural adjustment of the nation's foreign investment policies, foreign companies not only keep investing, but are also constantly expanding their projects in the blossoming land.

In April, Samsung Electronics Co, one of the world's leading electronics companies, announced its $7-billion-investment project in Xi'an, which is the South Korea-based electronics giant's largest investment overseas.

Samsung is not alone in its interest in China's west. Ford Motor Co, a renowned American multinational automaker, declared in early April that it would increase the annual capacity at its factory in Chongqing from 350,000 to 950,000 vehicles by 2014, together with its joint venture partner Chang'an Automobile Group Co.

While exports slide, "China aims to expand domestic consumption in the next five years, and Samsung's move signals its confidence in China's policy", said Wang Chao, deputy minister of commerce.

With China's economic transition getting on the fast track, an even more splendid picture of the prosperous economic power will unfold before the eyes of global investors in the coming years.

As Premier Wen Jiabao said: "China will continue to encourage more foreign companies to expand business in China as it urges local companies to invest overseas."♦

Read on: Breaking Down China's Overseas Investment, Part I

Li Zhenyu authors the "Golden Decade" column for People's Daily Online.

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