Foreign investment rises on services momentum

Foreign direct investment into the Chinese mainland jumped 10.5 percent year-on-year during the first five months of the year to $53.83 billion, with services being the mainstay, the Ministry of Commerce said on Thursday.

FDI in the services sector surged by 23.5 percent to $33.94 billion from the period a year earlier and accounted for 63 percent of total FDI between January and May.

The number of newly registered foreign-funded companies in this category jumped by 21 percent to 6,830 compared with the same period last year. Foreign investment in scientific research, financial and technical service sectors surged by 133, 476 and 35 percent, respectively, during the period under review.

Wang Zhile, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, said with China undergoing an industrial transformation and shutting heavily-polluting factories, the country is keen to seek new growth points from its rapidly growing services sector.

"The FDI into manufacturing has been waning, whereas it has been rising in the services sector. Most of the FDI from European and other developed nations is already flowing into the services sector with an overwhelming focus on high-end manufacturing," Wang said.

The FDI growth in high-end manufacturing has remained encouraging during the period with sectors like transportation equipment and telecommunications posting higher growth rates of 4.4 percent and 4.8 percent, respectively.

The top 10 contributors including the Hong Kong Special Administrative Region, France and the United Kingdom invested $50.96 billion in the Chinese mainland during the first five months, accounting for 94.7 percent of the total FDI.

Foreign investment from the European Union surged 23.2 percent year-on-year to $3.31 billion, while capital inflows from the Association of Southeast Asian Nations reached $2.63 billion, up 3.6 percent from the same period last year. Countries and regions along the Belt and Road Initiative invested $2.92 billion in China from January to May, an 11.6 percent increase on a year-on-year basis.

The Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives were put forward by President Xi Jinping in 2013, with the purpose of rejuvenating the two ancient trading routes and further opening up the markets.

Global companies, including Cargill Inc of the United States, Germany's Lufthansa Group and Mercedes-Benz also increased their investment in China during the first five months.

Though China's foreign trade slowed in the first five months, Lin Guijun, vice-president of the University of International Business and Economics in Beijing, said FDI will be a crucial support engine for the economy.

Lin suggested that the government should encourage more foreign companies to merge with Chinese enterprises under the ongoing public-private partnership reform.