Interpac Business and Migration Solutions Melbourne Australia

(March 16, 2011)

China's foreign direct investment (FDI) maintained its robust growth in February, driven by overseas investors' appetite for the planned industrial restructuring, which tops the agenda of the country's economic development over the next five years.

The Ministry of Commerce said on Tuesday that China's FDI increased 32.2 percent to $7.8 billion in February from a year earlier, following an increase of 23.4 percent in January.

The number of newly approved foreign-funded companies fell 10.9 percent last month, compared with the same period last year, according to the ministry.

"Each company's average investment volume in China is rising quickly, according to the data from the ministry," Zhou Shijian, senior adviser at the Ministry of Commerce, told China Daily.

According to the ministry, for the first two months of 2011, foreign investment rose 27.1 percent to $17.8 billion. In 2010, FDI inflow reached a record $106 billion, rising by 17.4 percent year-on-year.

"China will remain the top FDI destination in the world for the next several years because of its strong growth, led by the economic transformation, which is a tremendous lure for foreign investors," Zhou said.

According to the 2010-2012 World Investment Prospects Survey released by the United Nations Conference on Trade and Development (UNCTAD) last year, for the next two years China is likely to remain the largest FDI destination worldwide and is likely to emerge as the second-largest country for outbound direct investment (ODI), after the United States.

Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said more foreign-funded companies will tap into the wave of China's industrial upgrading during the next few years, as the transformation has become the new driver of the country's economy.

"China's high-end manufacturing industries - including the high-tech, clean-energy, environmental-protection and service industries - will cater to foreign investors' tastes and act as the drivers of China's FDI in the next few years," Huo said.

Foreign-funded companies will concentrate on promoting their capital-allocation efficiency by investing in sustainable development industries in the world's second-largest economy, according to Huo.

"China should accelerate its economic transformation by utilizing the fast-growing foreign investment to develop its high-tech, service and advanced-agricultural industries, all of which are crucial to its long-term economic development," Huo added.

Yao Jian, a spokesman for the ministry, said earlier that FDI growth in the service sector is consistent with China's industrial restructuring. In the future, the service sector is expected to demonstrate rapid increases in attracting FDI.

Zhou said companies that are leaders in the high-tech and environmental-protection industries will meet China's demand for foreign investment in the future.

China regards sustainable economic growth as the key to achieving its economic targets during the 12th Five-Year Plan period (2011-2015).

"We'll strengthen our efforts on developing advanced technologies and equipment, crucial components and the energy and resource industries over the next five years," Premier Wen Jiabao said during the annual session of the National People's Congress earlier this month.

(Source: Chinadaily)