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Investors home in on urban growth

By Ding Qingfen and Lan Lan  (China Daily)

07:04, February 04, 2013

The urbanization drive will create "appealing" business opportunities for US investors, a leading trade promoter said.

US investors are considering partnering with local governments in a senior citizen program in 10 major cities, said Barter Wu, chairman of the US-China Economic and Trade Promotion Association.

Under the program, local governments will set up satellite communities and 30 percent of senior citizens from city centers will be relocated to the new urban areas.

"This program will help boost urbanization, and it will also stimulate industries related to the aging population and create more jobs," Wu said.

US investors are inspecting sites around China and "we will probably see communities built up in the next three years", he said.

Urbanization is expected to create investment opportunities worth 40 trillion yuan ($6.3 trillion) in the next 10 years, according to expert estimations.

Feng Kui, a researcher at the China Center for Urban Development under the National Development and Reform Commission, the major economic policymaking body, said the urbanization drive will promote investment and boost consumption.

The major investors will be private and foreign enterprises, as well as individuals, instead of central and local governments, he said.

In 2011, for the first time in history, more Chinese people lived in urban areas than in the countryside.

The government signed an agreement last year with the World Bank to undertake a "knowledge hub" project.

Under the agreement, the global financial institution will gather examples of effective urbanization worldwide for Chinese planners to study and improve.

Urban investment and an export boom have fueled the nation's rapid economic expansion, but the country is shifting toward domestic consumption to fuel future growth.

The government has pledged to stimulate domestic consumption in the 2011-15 period, and urbanization is a key part of this strategy.

"China and the US can strengthen investment in many areas, and China can especially learn from the US on urbanization," Wu said.

Foreign direct investment in China dropped last year by 3.7 percent from a year earlier, the first annual decline since 2009.

While investment from European companies declined by 3.8 percent, FDI from the US jumped by 4.5 percent, according to the Ministry of Commerce.

US companies are increasing their investment in research and development.

This follows guidelines, issued in December 2011, encouraging foreign investors to focus on research and development to boost advanced manufacturing, service and high-tech industries.

In the past few years, a slew of US companies, including Caterpillar, General Electric and 3M, have announced an increase in their R&D investment in China.

Some US investors are also examining the possibility of setting up industrial parks that will focus on the low-altitude aerospace industry, Wu said.

"There is a strong interest in this sector," Wu said.

China announced in 2010 it will gradually open its airspace, below 4,000 meters, to civilian aircraft, and this will provide a lift for the helicopter and light aircraft industry.

"They plan to build industrial parks for this purpose around China, and they are researching where to locate them," Wu said.

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