Economists Split on Foreign Investment in China after SARS

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Last updated at: (Beijing Time) Friday, May 30, 2003

Economists Split on Foreign Investment in China after SARS

Chinese economists have mixed viewson how the severe acute respiratory syndrome (SARS) outbreak will affect the long-term, strategic decisions of foreign investors in China.

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Chinese economists have mixed viewson how the severe acute respiratory syndrome (SARS) outbreak will affect the long-term, strategic decisions of foreign investors in China.

Liu Pengfei, senior research manager with the Horizon Research Group, said investors might begin to spread their investments in medium-sized cities along the coast and the Yangtse River, forming a T-shaped area, as well as former investment centers on the Pearl River and Yangtze River deltas and areas around Beijing and Tianjin.

Jin Bosheng, a researcher on foreign investment with the Ministry of Commerce, said foreign investors would consider investing in less populous central and western areas of China.

However, Zhao Jinping, a researcher with the Development Research Center of the State Council, said central and western China were unlikely to attract investment due to their under-developed infrastructure and market scale, though SARS might bringmore investments there.

Liu said the public health sector would draw foreign investment,but Jin insisted that the manufacturing industry, the exploitation of natural resources, the high-tech industry and the environmental protection industry would continue to attract investment because the Chinese government would continue its encouraging policies after the SARS crisis.

They agreed that mergers, which account for only five percent of China's current foreign direct investment (FDI), would become the major channel of FDI. However, this change was not initiated by SARS, but by continuing opening up.

After the SARS crisis, the Chinese government would continue to encourage foreign investors and China's FDI would maintain steady growth, they said.

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