China witnesses boom in growth of foreign direct investment

China continues to be a strong magnet for foreign direct investment (FDI) in the first five months of this year, indicating that investors still hold an optimistic attitude towards the Chinese market, experts believed.

Photo taken on Nov. 3, 2020 shows the view of the Lujiazui area of Pudong, east China's Shanghai. (Xinhua/Ding Ting)

Actual use of FDI into the Chinese mainland surged 35.4 percent year on year to 481 billion yuan (about US$75.3 billion) in the first five months of this year, according to statistics from the Ministry of Commerce.

The period also saw a substantial increase in the number of foreign-funded enterprises. During this period, a total of 18,497 new foreign-invested enterprises were established across the country, an increase of 48.6 percent year on year and 12.4 percent over the same period in 2019.

With regards to specific sectors, the actual use of FDI in the service industry totaled 381.9 billion yuan, an increase of 41.6 percent year on year, while the amount of FDI actually used by the high-tech industry soared by 34.6 percent, of which the high-tech service industry grew by 37.6 percent and the high-tech manufacturing industry grew by 25 percent.

"The fact that foreigners are ramping up their investment in China shows that they are optimistic about the Chinese economy, market and consumption capacity," said Chen Fengying, a researcher with the China Institutes of Contemporary International Relations.

Chen added that the fact that the service sector continues to be a magnet for FDI serves as China's new characteristic for economic development at the present stage.

This trend, which aligns with the transformation and upgrading of China's economic structure, demonstrates that foreign investors believe in China's efforts to develop its high-end service industry and the upgrading of consumption, Chen further explained.

In a recently-released report, the Organisation for Economic Co-operation and Development (OECD) raised its forecast for Chinese economic growth to 8.5 percent in 2021 and 5.8 percent in 2022. Likewise, in its latest issue of World Economic Outlook, the International Monetary Fund (IMF) put China's 2021 growth at 8.4 per cent, up 0.3 percentage points from its previous forecast.

OECD experts believed that thanks to the country's effective control of the COVID-19 pandemic and the accelerated opening up of many industries, China's economy has recovered rapidly, making it a more attractive destination for FDI.