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FDI maintains growth momentum in China despite sharp fall globally

Updated: Feb 4,2017 11:13 AM

A clerk of Bank of China counts US dollars at a domestic branch.[Photo/Xinhua]

Foreign direct investment (FDI) maintained growth momentum in China in 2016 despite the downward trend globally, according to a report by the United Nations Conference on Trade and Development (UNCTAD) on global investment trends.

It said that the global FDI dropped 13 percent compared to 2015 to $1.52 trillion because of the soft growth in global trade and economy. However, last year, the FDI in China reached $139 billion, ranking third globally and realizing growth of 2.3 percent year-on-year.

“The structure of the FDI in China keeps improving with the FDI focusing more in the field of capital and technology intensive industries than the labor intensive industries,” said Zhan Xiaoning, director of the UNCTAD.

Zhan attributed the increase of FDI in China to the steady and relatively high-speed growth of the economy and also the improvement of the country’s industry structure.

The trend falls in line with the surveys conducted by many international agencies, with many still seeing China as one of the most popular destinations for FDI in the world.

The report by UNCTAD also is cautious about the major events of international politics lately, saying they may add to the uncertainty of global trade. The events cited included Brexit, the US withdrawal from the TPP, and upcoming elections in major European countries.

“In the key time when the major economies in the world are taking trade protection measures against the trend of globalization, China will inject more vitality to the continuous development of the world economy with its firm support for globalization,” said George N. Tzogopoulos, a scholar with European Research Institute of University of Nice Sophia Antipolis.

Analysts say that China’s need for FDI in the coming five years will total $10 trillion, which will provide foreign investors with multiple opportunities.

To attract more foreign investments, Chinese authorities have taken a series of measures in simplifying procedures for investment entry.

Another study showed that China’s overseas direct investment (ODI) is estimated to soar 40 percent to a record $189 billion in 2016 from the previous year. Globally, China’s ODI increased most rapidly in Europe in 2016, according to the study by the US consultancy Rhodium Group and Berlin-based Mercatur Institute for China Studies.