Developed countries targeted for FDI

Updated: 2012-02-23 06:57

By Ding Qingfen (China Daily)

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In guidelines released late last year, the government said it will encourage foreign companies to add or put investment into non-traditional sectors, including advanced manufacturing, high-tech, services and strategic emerging sectors, to transform the growth model.

But while labor costs rise nationwide and countries, including the US, are rolling out preferential policies to attract investment, China is losing its attractiveness as a destination for foreign investors, experts said.

US President Barack Obama announced in June that he is committed to sharpening US competitiveness to attract investment.

A national investment promotion agency, involving 23 government departments, was also set up along with a new "Select US" office.

Companies including Ford, Caterpillar, General Electric and Otis Elevator have announced manufacturing job creation plans in the US in the past couple of years. Some say they plan to bring back to the US production previously done in emerging economies, such as China and Mexico.

"The decline from the developed regions could be attributed to three factors," Liu said.

These are "policies like Select US, unwillingness to invest by companies due to the severe global situation and rising labor costs in China".

But "there could be other reasons and we have to find out."

China is promoting the inflow of foreign investment from developed economies. During a five-day visit to the United States by Vice-President Xi Jinping last week, a trade and investment promotion delegation reached a package of agreements and memorandums with the US worth $38.6 billion, including 25 investment projects by US companies in China.

Xi said in an interview with the Washington Post that China will try to create a fair and transparent investment environment for foreign businesses.

Both countries earlier agreed to start talks on investment agreements this year.

"It's unnecessary to worry too much about the retreat (of investment from the US and the EU)," said Zhang Xiaoji, a researcher at the State Council's Development Research Center.

It is not phenomenal, Zhang said.

Despite complaints ranging from market access to rising labor costs, "China's huge consumer market is more attractive for foreign companies", Zhang said.

Recent surveys by chambers of commerce of the US, EU and Japan showed a high proportion of foreign enterprises are willing to increase investment in China.

"The best way for the government to lure investment back is to open the market wider, reduce market interference and do what it promises," Zhang said.

Commerce Ministry spokesman Shen Danyang said last week that he believed China enjoys comprehensive advantages in absorbing investment, citing fast economic growth, increasingly expanding domestic consumption, and maturing laws and regulations.

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