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China still a top destination for foreign companies

By Ding Qingfen and Liu Jie (China Daily)

08:07, September 05, 2012

Don't talk to Kevin Thieneman about the economic slowdown and rising labor costs in China, Caterpillar Inc's head in China is mulling over the long-term development blueprint in China for the world's largest maker of construction equipment.

Although "the industry is slower this year than last, our long-term view for China is unchanged", said Thieneman in an interview with China Daily.

"We are as optimistic and bullish about China today as we were 24 to 36 months ago."

Hurt by eurozone debt woes and affected by property tightening policies, China’s economic growth has been decelerating this year, with the expansion slowing to 7.6 percent in the second quarter, the slowest pace in more than three years.

To some extent, the disappointing economic figures seem to have dampened foreign investors' confidence in the world’s second-largest economy, which has been the most attractive foreign direct investment destination among developing economies for over a decade. This July saw the eighth monthly drop in FDI in nine months.

But for the Chinese government, such a drop is a temporary phenomenon, and the Ministry of Commerce, the agency in charge of the nation's inbound and outbound investment, has repeatedly said "China is, in the long term, a most attractive market for foreign companies".

Multinationals including Caterpillar cannot agree more.

As infrastructure construction decelerates and demand for machinery equipment shrinks in China, industrial companies including Caterpillar are facing a difficult period. Caterpillar has even started exporting Chinese-made machinery to the Middle East and Africa to offset the slackening growth in China.

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