Investment Magnet

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Investment Magnet

China's rising inbound and outbound investment signals its growing role in global growth By Yu Nan

Despite the continued slowdown in private sector investment during the frst half of this year， Wang Jianlin， founder and Chairman of the Dalian Wanda Group，brimmed with confdence about the Chinese market.

“During the same period， tourism investment， for example， has seen strong growth of 30.5 percent year on year， indicating that industries with development potential are able to attract the eyes of investors，” said Wang， China's richest person.

He was attending the International Investment Forum 2016， part of the 19th China International Fair for Investment and Trade， held in Xiamen， southeast China's Fujian Province， from September 8-11.

Harley Seyedin， President of the American Chamber of Commerce in South China （AmCham South China）， echoed Wang's sentiments， maintaining a positive outlook on the Chinese economy. That was the 14th year AmCham has taken part in the fair.

A hydrogen fuel-cell car model at a vehicle booth at the 19th China International Fair for Investment andTrade in Xiamen， Fujian Province， on September 8

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“As China's economic structure is making faster adjustments， China continues to offer new opportunities to foreign investors and will remain a great destination for U.S. investors for many years to come，” he said.

A survey of 246 foreign companies conducted by AmCham South China earlier this year showed that 93 percent of all participants are optimistic about their profits growing in China and plan to increase investment in the country.

“The Chinese market has experienced dramatic changes over the past two decades，” said Seyedin. It now welcomes high value-added products and advanced services， where foreign investors have abundant opportunities to cooperate and develop in many sectors like consumption， healthcare，e-commerce， and education， he added.

The chamber's survey showed that about 75.6 percent of participants report providing goods or services specifcally to the Chinese market as their primary business focus rather than exporting goods or services.

Adjusting their China business due to market changes， such as labor costs and returns on investment， does not mean China is losing its appeal to these foreign investors， according to Zhan Xiaoning， Director of the United Nations Conference on Trade and Development （UNCTAD）'s Division of Investment and Enterprise.

China is still one of the world's most attractive destinations for investment， according to an annual global investment report by the UNCTAD. Foreign direct investment （FDI） into the Chinese mainland rose 6 percent year on year to $136 billion in 2015.

Policy signals

China is determined to become more accessible to global investors by further expanding market access， improving foreign investment policies and protecting the legitimate rights of foreign investors， according to Chinese Vice Premier Wang Yang speaking at the International Investment Forum 2016.

Vice Premier Wang said that since its reform and opening up in the late 1970s， China has been the top destination for foreign investment among developing countries for 24 consecutive years. More than 850，000 foreign companies have invested in China，achieving a total investment of $1.7 trillion.

According to the UNCTAD， global FDI grew 36 percent year on year to $1.7 trillion in 2015， hitting their highest level since the 2008 global fnancial crisis.

However， UNCTAD warned that crossborder investment is expected to contract by 10 to 15 percent this year. Zhan predicted that FDI into China will remain at a high levelbut won't have a drastic increase in 2016.

Despite an industry downturn， Caterpillar Inc.， the world's largest construction and mining equipment maker， sees it as a natural transition and is optimistic about China in the long run， said Chen Qihua， Vice President of Caterpillar Inc.， who has responsibility over the China Operations Division.

While acknowledging that the business environment in China is becoming more competitive， he stressed the importance of upgrading technology and improving effciency.

“China is an integral part of Caterpillar's long-term global strategy，” said Chen， adding that foreign companies need to make changes to grab new opportunities like the Belt and Road Initiative.

The nation will further open up to the global market by setting up seven new free trade zones， bringing the total to 11.

The top legislature revised four laws to ease restriction on overseas investment. These will lay a legal foundation for applying a negative-list mechanism to all overseas investment.

Vice Premier Wang vowed that China will build a fairer， more transparent and predictable investment environment for foreign investors， and give equal treatment to domestic and foreign businesses.

A Portuguese merchant introduces her country's wines to a guest at the 19th China International Fair for Investment and Trade in Xiamen， Fujian Province， on September 8

Misunderstanding buyouts

The country's outbound direct investment（ODI）， meanwhile， maintains rapid growth.

China remained the third largest investor in the world， after the United States and Japan， and its ODI rose 4 percent year on year to $128 billion in 2015， according to the UNCTAD's report.

Zhan said that China plays an exemplary role in supporting Africa through heavy investment and trade promotion. Take Tanzania for example. China is the second largest investor in Tanzania， with more than 500 Chinese companies doing business in the country. China's investment in Tanzania climbed to more than $4 billion in 2014.

“An increasing number of Chinese enterprises have acquired foreign companies， and China has thus become a major source of foreign capital for some developed countries，” said Zhan， adding that as China continues to push forward the Belt and Road Initiative， China's ODI will maintain a strong growth momentum.

Acquisitions by Chinese companies have been one of the main drivers for China's steadily rising ODI. They also lead to some misunderstanding of China's investment and buyout strategy.

Liu Yonghao， Chairman of New Hope Group Co.， China's largest private agricultural company， does not agree with the perception that China is buying up the world. “Such reports are over-exaggerated，” he said.

Liu believes that it is quite normal for China， as the world's second largest economy， to participate in global investment. “We have been making great efforts to integrate ourselves into the global economy via crossborder investment and cooperation. In this way， Chinese entrepreneurs will be gradually involved in making international rules，” he said. ■

Copyedited by Francisco Little

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