Low-end, labor-intensive and environmentally unfriendly foreign direct investment will no longer dominate China’s investment landscape, as its primary engine of economic growth has shifted from exports and investment to consumption and innovation, business leaders said.
FDI into high-tech manufacturing fields including medical, electronic and telecommunication equipment manufacturing maintained rapid growth in the first four months of this year. The figure jumped 79.5 percent year-on-year to 29.6 billion yuan ($4.65 billion), data from the Ministry of Commerce show.
“The transformation comes after China decided to focus on the quality and sustainability of its economic growth rather than quantity,” said Zhang Xiaoqiang, vice-chairman of the China Center for International Economic Exchanges.
He said a green environment, stability, employment and the improvement of people’s living standards are the government’s priorities.
In the past, foreign companies manufactured products in China and shipped them to global markets. The situation has changed dramatically as many multinationals want to sell in China, too. The country has become the world’s largest market that no company can overlook, Zhang said.
Shi Yong, vice-president of the China Machinery Industry Information Research Institute in Beijing, said that technological innovation and related services will be key investment areas for both domestic and global companies over the next decade.
“China’s global role has evolved from a low-cost manufacturer in the late 1990s to the world’s growth engine around 2010, and now an unarguably global innovation engine, especially in areas such as high-speed trains, electronics, large passenger jets and nuclear power technologies,” he said.
Denis Depoux, CEO for China of global consultancy Roland Berger, said that, pushed by the fast development of the Belt and Road Initiative, Chinese technologies are increasing their market share, but there is also a significant share of international technologies and investment deployed from China along the Belt and Road routes.
“In addition to Chinese markets, many foreign companies are also shipping their products and solutions to countries and regions involved in the Silk Road Economic Belt and the 21st Century Maritime Silk Road,” he said. “Chinese companies, primarily State-owned enterprises, cooperate with foreign companies in third-party markets related to the initiative.”
Global companies, including ABB Group, Otis Elevator Co, Siemens AG and General Electric Co, have partnered with China’s power, infrastructure, transportation and energy companies to tap the opportunities created by the Belt and Road Initiative, especially in engineering, procurement and construction projects.
“Many of these opportunities come from many countries’ surging demand for public services, manufacturing and infrastructure projects, especially in fast-growing economies such as Turkey, Poland and Qatar,” said Claudio Facchin, president of ABB’s power grids division.
Judy Marks, president of Otis, said the markets related to the Belt and Road Initiative form an important platform for the group to enhance its global earning ability, as it exports a significant amount of its equipment manufactured in China to global markets. She said Shanghai is home to Otis’ high-rise contracts and logistics center, which is part of its global major projects organization supporting its major high rise and infrastructure projects around the world.
Supported by 15,000 employees including 7,500 mechanics, Otis currently operates six factories, nearly 200 regional branch offices and 550 service depots throughout China.