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Investing in China, Part II: Vibrant Opportunities amid Transition

By Li Zhenyu (People's Daily Online)

13:12, November 21, 2012

For foreign investors, China's consumption transition signifies new opportunities amidst global uncertainties

The "oriental pearl" is still shining, maintaining an attractive environment for global investors. (Photo/China Daily)

Investing in China, Part I: A Time of Harvest

For a long time, China has served as a sustained growth engine for multinational corporations. However, after a decade of miraculous economic growth driven by exports and investment, the powerful economic engine is slowing down, and moving away from the model that has served it so well.

Is the shining "oriental pearl" losing its luster to global investors? Or is it appreciating in value?

A Vibrant Trend

The Chinese economy is facing structural transformation after 10 years of export-driven growth, and so is the country's utilization of foreign capital. The transition marks a new trend that signifies vibrant opportunities for foreign businesses.

"China is well on track to transforming itself into the world's quality manufacturing powerhouse from a low-cost processing and assembling base," said Hisao Sakuta, chairman of Omron, a leading electronics manufacturer.

Foreign investors are encouraged to invest in high-end manufacturing industries, high-tech industries, modern service industries, new energy industries, as well as energy conservation and environmental protection industries, and make investment in China's western and central regions, according to the Several Opinions on Further Improving the Work of Utilizing Foreign Investment released by the State Council in 2010.

This document set out clear guidelines on the structural adjustment of China's foreign investment policies, which seek an optimized structure and better quality of foreign capital utilization.

The Global Investment Trends Monitor released last month by the United Nations Conference on Trade and Development (UNCTAD) said that China is experiencing structural adjustments in their foreign direct investment (FDI) flows, including the relocation of labor-intensive and low-end market-oriented FDI to neighboring countries.

In the eyes of Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, China can no longer rely on cheap labor and preferential policies to attract foreign investment, and the country is attaching great importance to improving its investment environment.

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