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People's Daily Online>>China Business

FDI focus continues to shift

By Ding Qingfen (China Daily)

10:13, December 16, 2011

Overseas visitors attending an investment and trade fair in Ningbo, Zhejiang province. China's foreign direct investment surged by 13.15 percent year-on-year to $103.77 billion during the first 11 months of this year. Zhang Peijian / For China Daily

BEIJING - Despite the reshoring of manufacturing activity to the developed economies, China is well on track with the diversification of its industrial structure, moving the focus of foreign direct investment (FDI) from the manufacturing sector, in line with the country's new FDI policy, said government officials.

While labor costs in China continue to rise and the developed nations, including the United States, strengthen their efforts to attract FDI to boost the economy and create jobs, China's FDI from the US and the European Union (EU) has either been in decline or slowing down.

Government officials and experts attribute the decline in FDI to the reshoring of manufacturing activity, which means foreign companies moving factories from China to their countries of origin.

But the officials said reshoring is only a small part of the story and not necessarily a bad thing, believing that the structure of China's FDI is changing with a move away from low-end manufacturing towards those sectors that could help China to transform its economic growth model, including services, high-tech, new-energy and high-end manufacturing.

US investment decreased by 23.05 percent year-on-year to $2.74 billion between January and October, and investment from the 27 nations of the EU gained slightly by 0.29 percent to $5.98 billion, according to the Ministry of Commerce.

But overall, the nation's FDI surged by 13.15 percent to $103.77 billion during the first 11 months of this year, close to the total for the whole of 2010.

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