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Foreign investment surges in Central China

By Jin Xianan Jiang Chang (China Daily Hubei Bureau)

Updated: 2013-04-02

In 2012, foreign investment declined by 3.7 percent, its first annual decline since 2009.

Although foreign investment has gone down overall, especially in East China, the actual use of foreign investment in Central China has increased by 18.5 percent year-on-year.

"There is a trend that international capital and coastal enterprises are moving to China's midwest. As a result, the growth of foreign investment in Hubei is closely related to the industrial transfer in East China," said Chen Bin, director of the Foreign Trade Management Office under the Hubei Department of Commerce. "In 2012, the effective use of foreign direct investment (FDI) in Hubei grew to 5.67 billion dollars, a year-on-year increase of 21.72 percent, which is faster than the national average."

"Among all industries, in terms of growth rate, the accommodation and catering industry is developing the fastest, rising by 777.03 percent. The manufacturing sector ranks first in terms of actual utilized foreign investment with an increase of 3.48 billion dollars, followed by the real estate sector, which saw investment grow by $1.39 billion, a year-on-year increase of 114.71 percent," Chen said.

Chen believes that foreign investment is attracted to Central China, represented by Hubei, because the coastal region is losing policy advantages while relative advantages in central regions are becoming more and more conspicuous. Some of the advantages include abundant labor resources, and low business cost.

Chen added that there is fierce competition for investment invitation in the central region at the moment. Many flexible measures of investment invitation have been adopted that still follow national industrial requirements.

"For significant projects, especially those with a strong ability to bring huge social benefits and those at a high technical level, Hubei provides personalized service," Chen said.

Fortune 500 companies, leading enterprises, companies with strong growth, and firms with large employment capacity will receive policy and resource allocation benefits, not only for certain enterprises but also for certain projects—"one policy for one enterprise".

According to a 2012 foreign investment report by the Wuhan administration for industry and commerce, in 2012, the rate of disbursement of foreign investment in Wuhan was 84.4 percent, an all-time high. In 2012, the amount of newly-registered foreign-invested enterprises totaled 537, a slight dip from the year before. However, total new investment surged significantly to $2.33 million.

In 2012, 12 newly-registered foreign financial enterprises began operations in the city. In addition, Wuhan welcomed 35 new enterprises with foreign capital totaling $343 million. Hong Kong and Shanghai Banking Corporation, the Societe Generale of France, Bank of East Asia, Mizuho Corporate Bank, Standard Chartered Bank, the Bank of Tokyo-Mitsubishi UFJ and some Korean corporate banks have established branches in Wuhan. Wuhan now has the most foreign-invested financial institutions in Central China.

Some officials from China's Ministry of Commerce noted that Chinese economic development is transforming from export-oriented to domestic-demand driven, which also contributes to the change of flow in foreign investment.

More and more industries are paying attention to the domestic market, which has more potential. Therefore, an increasing number of foreign investors are deciding to transfer their industries from eastern to central regions in order to get closer to China's inland market.