Experts: Testing times ahead to attract investments

The country will face heavier competition in attracting foreign direct investment this year as both developed and developing economies seek capital from overseas, top trade officials said on Tuesday.

Jiang Zengwei, chairman of the China Council for the Promotion of International Trade, said foreign countries have already accelerated the pace of attracting overseas capital to compete with China, while the country is in a transition period to a more robust, dynamic and sustainable economy.

Even though FDI into China rose by 6.4 percent year-on-year to $126.27 billion last year, FDI into India nearly doubled in 2015 to $59 billion, while the United States emerged as the top host country for foreign capital.

Thanks to surging cross-border merger and acquisition activities, as well as equity investment, the US attracted $384 billion of FDI last year, the highest level since 2000, according to the annual report of the United Nations Conference on Trade and Development.

In the meantime, other major host economies in the world, including the Netherlands, the United Kingdom, Brazil and Canada gained $90 billion, $68 billion, $56 billion and $45 billion of FDI in 2015, respectively.

"Many foreign companies have discovered that there is demand for infrastructure investment from China's inland regions, the emerging consumption market including e-commerce and multi-model logistics services, along with the fast development of the service sector," Jiang said.

Foreign investment in China's service industry rose by 17.3 percent, accounting for 61.1 percent of the flow in 2015. Most of the FDI from Europe and other developed economies had already flowed into the services sector, with an overwhelming focus on high-end manufacturing.

"China's further opening-up in services and industries related to environmental protection, communication, new energy and healthcare have ensured foreign businesses fair access to the market and a level playing field in terms of competition," said CCPIT Vice-Chairman Wang Jinzhen.

Wang said major global companies are still optimistic about the Chinese market and investment prospects after assessing the market potential of other major global economies.

Attracted by the rising spending power of China's fast growing middle-income group, Starbucks plans to open 500 stores this year in China, its largest market outside of the US. It aims to create 10,000 jobs in the country annually up to 2019.

Uber Technologies Inc, a US ride-hailing company, has also committed to invest 6.3 billion yuan ($957 million) in China to diversify its businesses ranging from transportation services to automotive financing.

"Even though production materials and labor costs in Southeast Asian countries are relatively cheaper, China has solid infrastructure and power facilities, skilled workers and a vast and mature market based on its long-term wealth accumulation and population size," said Ma Yu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing.