Minister of Commerce Gao Hucheng dismissed on Tuesday the speculation that China is undergoing a wave of withdrawal of foreign direct investment (FDI), adding that utilized FDI maintained growth in China while it dropped globally in 2016.
The speculation is primarily based on the fact that FDI into the Chinese mainland dropped by 9.2 percent year-on-year to $12 billion in January. “But both global and China’s own experiences have shown that it’s normal for FDI in any country to come and go with economic development and the change of industrial structure,” Gao was quoted by People’s Daily Online as saying.
“I’ve seen that [the making of] many products has been transferred outside the country. But meanwhile many high-end industries are coming in. I think this is the result of the market playing a pivotal role in allocating resources,” he said.
Gao added that to judge the overall utilization of FDI in China, figures should be viewed over a much longer term, not to mention that Spring Festival, which falls in January or February, has an influence over the figures.
Data from the Ministry of Commerce, cited by China Daily, show that the amount of utilized FDI in China grew by 4.1 percent to 813.2 billion yuan (US$118.2 billion), while global FDI dropped by 13 percent year-on-year last year.
A growing amount of FDI poured into the service sectors and high-end manufacturing. Utilized FDI in the service sectors grew by 8.3 percent in 2016 to 571.6 billion yuan (US$83 billion), while investment going to the high-tech service sector were up by 86.1 percent to 95.6 billion yuan (US$13.8 billion).
Foreign investment heading to medical equipment manufacturing increased by 95 percent year-on-year and to pharmaceutical manufacturing by 55.8 percent.
Gao was quoted by local media as saying that absorbing foreign investment will be a key part of China’s basic opening-up policy.
In 2017, Gao said, the ministry will keep reducing access restrictions on foreign investment, facilitate investment practices and try to build a fair, transparent and predictable business environment for foreign investors.