FinancialservicesareopeningupforforeigninvestmentAFTERathree-decadesurgeofimpressivegrowth,foreigndirectinvestment(FDI)inChinahasshoweddefinitesignsofslowingdown.ExpertsobservethatthiscanbeattributedtotheprofoundchangesthathavetakenplaceintheglobalindustrialchainalongwiththechallengeofChinalosingitscompetitiveedgeintermsoflabor,landandnaturalresources.
StatisticsfromtheMinistryofCommercesayChinautilized813.2billionyuaninFDIin2016,ayear-onyearincreaseof4.1percent.However,ifthisamountisvaluedinU.S.dollars,whichis$126billion,thentheinboundFDIin2016actuallydroppedfrom$126.2billionin2015,becauseofthedevaluationoftherenminbi,China鈥檚currency.
ToaddressthesechallengesandresuscitateFDIgrowth,China鈥檚StateCouncilissuedadocumentinlateJanuaryoutlining20measurestospurforeigninvestment,includinglooseningrestrictionsonforeigncapitals鈥檈ntryintotheservice,manufacturingandminingsectors.Italsopledgedtobeefupeffortstoprotectintellectualpropertyandencouragebothdomesticandforeignbusinessestoequallybidforgovernmentprocurement.Inaddition,foreignbusinessesareencouragedtoinvestintheunderdevelopedwesternregionandrevivalofthenortheasternprovinces,China鈥檚oldheavy-industrybasesthatareunderindustrialtransformation.
Anewplayingfield
Thenewpolicyhasopeneddoorsinsomemonopolysectors.Overseascapitalisnowallowedtobeinvestedinmanufacturingindustriessuchasrailtransportationequipment,motorbikesandprocessingofoilsandfats.Restrictionsonforeigninvestmentsinextractingunconventionaloilsandmineralsareloosened,whilejointventurestoexplorepetroleumandgasarerequiredtofiledocumentsforrecordsinsteadofgettingapprovalbeforeoperation.
鈥淭heinflowofforeigncapitalwillacceleratereforminmonopolysectorsbybringingforeigntechnologiesandhumanresourcesalongwithcapital,鈥漵aidHaoHongmei,DeputyDirectorofInstituteofForeignInvestment,ChineseAcademyofInternationalTradeandEconomicCooperation(CAITEC).
XuHongcai,aresearcherfromtheChinaCenterforInternationalEconomicExchanges,sharesHao鈥檚sentiments.鈥淚tmeansforeignbusinessesinChinawillembraceamoreopen,fairerandmoreconvenientbusinessenvironment,鈥漢esaid.
Accordingtothedocument,Chinawillmakegreatereffortsincreatinganenvironmentforfaircompetition.AllbusinessesregisteredinChina,nomatterforeignordomestic,aretreatedequally.
Withagreenlightgiventoforeigncapital,Chinesecompanieswillfacefiercercompetitionfromforeignrivals.InternationalmanufacturerslikeSiemens,BombardierTransportationandABBGroupareshowingintentionsofenlargingmarketsharesinChina.
However,challengesalsobreedopportunities.BaiMing,aresearcheroninternationalmarketsatCAITEC,believesliftingrestrictionswillhelpoptimizeresourcesinbothdomesticandglobalmarkets.鈥淔oreigncapitalbringsincooperationopportunitiesandpossibilitiesofoptimizingdomesticandglobalresources.IthelpsstrengthenChinesecompanies鈥檆ompetitivenessintheglobalmarket,鈥漢esaid.
Intheservicessectors,restrictionsonforeignbusinessesinvestinginbanks,sectorsofsecuritybrokeragesandinsurancewillbeloosened.Accounting,architecturaldesignandratingserviceswillallowforeigncapitaltoinvest.Sectorssuchastelecommunications,Internetandeducationwillalsobegraduallyopenedup.
DongDengxin,DirectorofFinanceandSecuritiesInstitutewithWuhanUniversityofScienceandTechnology,pointedoutthemovewillaccelerateglobalizationofdomesticfinancialbusinessesandstrengthentheirinternationalcompetitiveness.鈥淎lthoughChina鈥檚state-ownedbanksareverybig,theirshareontheglobalmarketisrelativelysmall.OpeningupinthesesectorswillacceleratestepsofChinesebanksgoingabroad,鈥漵aidDong,addingthatforeignbankswillbeabletoenterChinesemarket.
Chinaalsointroducedfavorablepoliciesforforeignbusinessesenteringnewsectors.Itencouragesinvestmentinhigh-end,greenandintelligentmanufacturingtobeefupthenation鈥檚effortsinrealizingMadeinChina2025strategy,supportforeignbusinessestobidforinfrastructureprojectsviafranchiseandestablishresearchcentersorcooperatewithdomesticresearchinstitutes.
FDIcannowbeinvestedinChina鈥檚railtransportationindustryXINHUA
Attractionremaining
TheWorldInvestmentReport2016releasedbytheUnitedNationsConferenceonTradeandDevelopmentshowsthatglobally,ChinaremainsthesecondmostattractivedestinationforFDI.Itsboomingservicessector,high-endmanufacturing,innovationsectoranditswesternregionareshowinglucrativeprospects.
AccordingtoChina鈥檚NationalBureauofStatistics,consumptioncontributed64.6percenttoChina鈥檚economicgrowthin2016.Theoutputoftheservicessectortotaled38.4trillionyuan($5.6trillion),makingup51.6percentofthetotalGDP.
DespitetheslowgrowthofinboundFDIinothersectors,foreigncapitalissensitivetotheboomingservicessectorinChina.In2016,FDIinChina鈥檚servicessectoraccountedfor70.3percentofthetotalFDIinallsectors,reaching571.58billionyuan($83.2billion),ayear-on-yearincreaseof8.3percent.
鈥淔oreigncapitalisattractedbythelucrativepotentialofChina鈥檚servicessector.Withthecountryupgradingitseconomicstructure,themomentumforthegrowthoftheservicessectorwillremainrobustinthefuture,especiallymodernservicessectorsinvolvingtechnologyandinformation,鈥漵aidLiDawei,aresearcherfromAcademyofMacroeconomicResearchwithChina鈥檚NationalDevelopmentandReformCommission.HeisconfidentthatmoreforeignbusinesseswillinvestinthissectorasChinaimprovesitsbusinessenvironmentandloosensrestrictionsontheentryofforeigncapital.
WiththeBeltandRoadInitiative,infrastructureandconnectivityinChina鈥檚westernregionareimproving.鈥淭hehugeuntappedmarketpotentialinthewesternregionofChinawillbeasustainedimpetusforforeignbusinesses,鈥漵aidHao.
Expertsbelieveopportunitiesproducedbyurbanizationarealsoattractions.鈥淧romotingurbanizationwillcreateanevengreatermarket,ofwhichforeignbusinessescanhaveashare,鈥漵aidLi.
AccordingtoLi,toincreasetheattraction,citiesinthewesternregionshouldworktogetherandcultivatepowerfulindustriesthatcanpromotetheemergenceofsupportingindustriesaswellaseconomicprogressoftheregionasawhole.鈥淎betterandfairerbusinessenvironmentsupportedbyfavorablepoliciesandimprovedinfrastructureisalsoneeded,鈥漵aidLi.
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