Why is foreign investment still strong in China?
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According to the statistics released by China's Ministry of Commerce, China approved 5,937 new foreign-invested companies in the first quarter, up 8.8 percent year on year, and Foreign Direct Investment (FDI) in China has increased with a 29.4 percent year-on-year rise in the first quarter to 30.34 billion U.S. dollars,
By the end of March, China had approved 716,578 foreign-invested companies and used 1.08 trillion U.S. dollars of FDI.
Seek wider space for development
"The quick increase in foreign investment introduced by China in the first quarter was within the expectation because China has a big market as well as a large population. However, its GDP per capita is lower than the half of world's average, which also means it has great potential for development," said Zhang Hanya, the president of the Investment Association of China.
He also pointed out that some of China's regulations on foreign investment in recent years did make some small foreign companies unhappy, but those measures are in line with the principles of the World Trade Organization (WTO) and promises from China. He said they do not affect the investment from large transnational corporations.
Zhang said the world is currently walking out of the shadow of the financial crisis and needs more liquidity. Therefore, China, with its stable politics situation, fewer natural disasters and better environment for investment, has automatically become the priority for foreign investors. Those foreign businessmen are going to seek much wider space for their development in China.
However, the major driver behind the increase in FDI in the first quarter of this year is due to the attractiveness of the domestic economy, said Mei Xinyu, a researcher from China's Commerce Ministry.
Analysis emphasizes that despite the downturn the global economy, foreign enterprises in China are generally doing pretty well due to the quick recovery of China's economy and the investment environment, which is constantly being enhanced. Some of enterprises became their mother companies' cash cow. China, which has great potential for development, has already become the "safe house" for international capital amid the financial crisis.
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