Better to assess China's FDI climate with companies' actions

Updated: 2010-08-06 16:37
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BEIJING - In assessing the foreign direct investment (FDI) climate in China, foreign companies' actions are more reliable than their words, an economist from the United Kingdom said.

"The claim that China's FDI climate is worsening is shown to be false by the fact that foreign investors have been pouring capital into the country," said John Ross, a visiting professor at Antai College of Economics and Management, Shanghai Jiao Tong University, in an exclusive interview with Xinhua Friday.

Ross, who served as director of economic and business policy for mayor of London Ken Livingstone from 2000 to 2008, said that "As I learned clearly in eight years in charge of London's economic policy, it is necessary primarily to follow figures, which show companies' actions rather than what their spokespeople say."

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From January to June this year, China saw 12,400 foreign-funded enterprises established, a year-on-year increase of 18.8 percent, and the actual FDI into China climbed by 19.6 percent to $51.43 billion, China's Ministry of Commerce said last month.

In 2009, FDI into China was $90.03 billion -- equivalent to 73 percent of the FDI inflow into the US despite the fact that China's economy was in dollar terms only one third the size of the US, said Ross.

"Relative to the size of their economies, the flow of FDI into China is twice as high as the FDI into the US. Put another way, in terms of the relative size of their economies, foreign investors find China twice as attractive to invest in as the US," he said.

The figures echo the results of a survey done by the Development Research Center (DRC) of the State Council on foreign-funded enterprises along China's eastern coast in the last quarter of 2009.

The survey found that 62.5 percent of the foreign firms picked China as the key market in their global development strategy, and more than two thirds said they would expand their footprints in the Chinese market, citing China's great market potential, high-quality infrastructure, wide market access and low labor costs as the main reasons.

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