Nov. 15 (NBD) -- According to data from the Ministry of Commerce of China (MoC), a total of 666.4 billion yuan (100.6 billion U.S. dollars) of foreign direct investment (FDI) flew to service and manufacturing sectors in the first ten months of this year, accounting for up to 98.2 percent of the total FDI received in the period.

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High-tech service, manufacturing sectors become hot areas for investment

Both the high-tech manufacturing and service industries continued a strong growth momentum.

In the January-to-October period, foreign investment in actual use in the high-tech manufacturing sector, including the manufacturing of electronic and communication equipment, computer and office equipment, medical equipment, and instruments and apparatus, came in at 56.65 billion yuan (8.5 billion U.S. dollars), up 22.9 percent from the same period of last year. The actual use of foreign investment in the field of high-tech services such as information services, R&D and design services rose by 20 percent year on year to around 95 billion yuan (14.3 billion U.S. dollars).

Bai Ming, deputy director of the international market research institute of the Chinese Academy of International Trade and Economic Cooperation under the MoC, told NBD that the investment structure of foreign enterprises has changed in recent years.

The manufacturing industry had the absolute advantages in attracting foreign investment in the past, with more than 70 percent of the total pumped into the area. However, with the rise of factor costs in China, low-end manufacturing is moving towards southeast Asian countries. Under the circumstances, high-end manufacturing and service industries are becoming a new favorite of foreign investors, Bai said.

NBD notices that in addition to market demand and economic structure changes, China's opening-up policies make great impact on the investment structure of foreign enterprises.

In June 2017, the country released the 2017 version of the Catalogue of Encouraged Industries for Foreign Investment.

The new version loosens the limits on foreign investment in the areas including service, manufacturing, and mining.

The investment in labor-intensive and some capital-intensive sectors has been declining while capital in high-tech service and manufacturing segments has been soaring in recent years, which on the one hand, reflects that China's economic structure is getting more diversified with the rise of new industries and new types of business, and on the other hand, indicates that China is gradually relaxing the foreign investment limits, Zhang Yongjun, deputy chief economist of the China Center for International Economic Exchanges, said to NBD.

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Investment in Central China rise sharply

Foreign investment in actual use in Central China amounted to 50.6 billion yuan (7.6 billion U.S. dollars) in the first ten months of this year, representing a 47.9 percent increase year on year, said an official with the Department of Foreign Investment Administration under the MoC.

The growth rate of received foreign investment in the region is much higher than that in East China in the same period.

Regarding this, Bai Ming said to NBD that the improved transportation in Central and West China helps in a significant way to attract foreign investment. The central areas of China can now enjoy both the convenience brought by the Silk Road Economic Belt as well as opportunities arising from the 21st-Century Maritime Silk Road.

With the establishment of modern logistics systems and opening of China Railway Express, China's central areas will see huge development potentials in future, Bai commented.

Wang Shouwen, vice minister of the MoC, agreed with Bai in this respect, saying at the conference that Central China cities can export goods to foreign countries by sea and to Central Asia and East Europe by China Railway Express.

Apart from strong advantages in labor and talent resources, the central region also offers attractive policies to woo foreign investors. According to the 2017 version of the Catalogue of Advantaged Industries for Foreign Investment in Mid-west China, six provinces in Central China increased the number of advantaged industries where foreign investors are encouraged to invest by 43 from the figure listed in the 2013 version.

 

Email: lansuying@nbd.com.cn 

Editor: Lan Suying