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Is mass foreign investment withdrawing from China?

TaiShang

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Is mass foreign investment withdrawing from China?
(People's Daily Online) 13:25, May 12, 2015

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Diagram by Zhang Ruiqi

There is no mass capital withdrawal of overseas enterprises in China and there will be none in the future. Although China has become a net exporter ofcapital, the need for foreign investment has never changed.

This year, there have been wild reports that watchmaker Citizen Precision in Guangzhou has closed, that Panasonic intends to call back two assembly lines for TV sets in China, and that Microsoft has decided to close two Nokia factories, suggesting the country was no longer a favorite destination for foreign investment.

So, are foreign firms withdrawing their capital from China?

"To assess whether there is a capital withdrawal by overseas companies, we should rely onthe facts", said Shen Danyang, spokesman for China's Ministry of Commerce (MOC) whengiving the following data.

In the first quarter of 2015, 5,861 new foreign-funded enterprises were established,representing year-on-year growth of 22.4 percent; the actual use of foreign directinvestment (FDI) reached 34.88 billion US dollars, an increase of 11.3 percent.

China's attraction to foreign investment is changing: in 2014, 55.4 percent went to theservice sector, 22 percentage points higher than to manufacturing. In addition, the share ofactual use of foreign investment in the middle and west regions of China rise 0.5percentage points to 18.1 percent.

In 2014, China's actual use of foreign investment amounted to 119.6 billion US dollars, 1.7 percent growth compared to the same period of 2013, and China saw the highest FDI inflow for the first time, exceeding the United States, Russia, Brazil and other major economics.

Generally, the inflow of foreign investment is bigger than the outflow, and there is no mass withdrawal of foreign capital, said Shen Danyang. He attributed the individual withdrawals over the past years to the upgrading of the economic structure and the change of comparative advantage.

After China became a net exporter of capital in 2014, the significance of FDI in making up or the shortage of capital has been weakened, but it does not mean its role in fueling economic development has ended, said Liu Yuanchuan, assistant dean of the School of Economics at Renmin University of China.

China's need for foreign investment has not changed, but certain aspects have changed,Shen Danyang believes.

The new Foreign Investment Industrial Guidance Catalog encourages foreign firms to invest in the fields of modern agriculture, high technology, advanced manufacturing,energy saving and environmental protection, modern service.

A survey recently released by the American Chamber of Commerce in Shanghai shows that 73 percent of foreign-funded companies have achieved profitability, and 75 percent have achieved revenue growth, 67 percent plan to expand investment in China in 2015.

"We are confident that China will continue to attract the greatest share of the world's foreign investment, and that the absorption of foreign capital will remain stable," said Shen Danyang.
 
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China becomes S.Korea's No.2 investment destination
May 11, 2015

SEOUL, May 7 -- China became South Korea's second- largest investment destination in 2014, indicating a rising demand among South Korean companies for investment into one of the world' s fastest growing economies, central bank data showed Thursday.

Outstanding external investment stood at 716.6 billion U.S. dollars as of end-2014, up 95.5 billion dollars from a year earlier, according to the Bank of Korea (BOK).

The United States kept the No.1 position among South Korea's investment destinations, with 173.6 billion dollars, or 24.2 percent of the total, invested into the world's largest economy.

China became the No.2 place for the country's foreign investment with 132.4 billion dollars, beating the European Union (EU) into which South Korea invested 127.2 billion dollars as of end-2014.

China ranked third in terms of South Korea's investment destination in 2013, beating the ASEAN nations, and rose to the second place in 2014 after outpacing the EU.

South Korea's investment into China more than doubled in the past four years from 64.1 billion dollars at the end of 2010.

By currency, the country's U.S. dollar investment was 360.6 billion dollars, or 50.3 percent of the total, as of end-2014. It was followed by the Chinese yuan with 98.6 billion dollars and the euro with 58.1 billion dollars.
 
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China still remains foreign investors hottest destination and i think it would remain the same for at least a decade.
 
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Wow. The renminbi is the 2nd most used currency for South Korean investment even ahead of the Euro.

Not bad for a currency still not open under the capital account.

And Russia was the third largest FDI recipient in 2014. So much so for the sanctions that that (put a bird name here) had been discussing over with you on another thread.
 
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