FDI continues flowing into tech and manufacturing

Foreigners have continued to invest in China in the first three quarters of the year, most noticeably in technology-based services and manufacturing, according to government data released on Tuesday.

Despite a decline in investor interest in the traditional manufacturing sector, the Ministry of Commerce reported a year-on-year increase of 19.2 percent in the service industry to just under $58 billion, accounting for more than 60 percent of China's inflow of foreign direct investment in the first three quarters.

In the meantime, FDI in the high-tech service industry surged 57.6 percent to $6.16 billion, the ministry said.

"The robust data indicates that China has made significant advancements in its economic restructuring, buoyed by the strong support for high-added value services and manufacturing," said Zhang Jianping, a senior researcher at the Institute for International Economic Research under the National Development and Reform Commission.

"Foreign investors are confident about sustained growth prospects in China despite the economic constraints," he said.

FDI into China's overall manufacturing industry edged up 0.7 percent year-on-year to $29.84 billion during the same period, according to the ministry.

High-tech manufacturing FDI rose 10.4 percent to $7 billion. Electronic components, integrated circuits, communication equipment and aerospace equipment manufacturing continued to shine. FDI into communication equipment manufacturing rose by about 171.7 percent.

"The figures indicate that traditional manufacturing, especially heavy chemicals and labor-intensive industries, have lost favor with investors. High-tech services and manufacturing industries, on the other hand, continued to attract foreign investors due to their strong growth potential," Zhang said.

In June, tech giant Cisco said it plans to invest $10 billion in China with its local business partners over the next several years, in a bid to expand its market share.

The cash injection will be used to "support local innovation, help with the country's ongoing transformation and support the growth of local economies and businesses", the San Francisco-based tech giant said in a statement.

The company has also signed a memorandum of understanding with the National Development and Reform Commission to expand in China, focusing on innovation, equity investment, research and development as well as job creation.

In September, Dell said it is investing $125 billion in China over the next five years to boost innovation, demonstrating its long-term commitment to the Chinese market. In addition, it will further expand its research and development team in China, and foster entrepreneurship and innovation among Chinese enterprises.

The service industry accounted for 49.5 percent of the GDP in the first half of the year, and is expected to surpass 50 percent by year-end, data from the National Bureau of Statistics showed.

"China's service industry boasts significant growth potential. With the establishment of four free trade zones in Shanghai, Guangdong, Tianjin and Fujian to increase economic activities, the service sector will get a further boost," Zhang said.

zhuwenqian@chinadaily.com.cn

(China Daily 10/14/2015 page3)