China Still a Focus for Foreign Direct Investment

NANNING, Aug. 16 -- Some western commentators say China's foreign direct investment climate has worsened. But experts and entrepreneurs attending the on-going 5th Pan-Beibu Gulf (PBG) Economic Cooperation Forum disagreed.

China is a better destination because of China's advantages, including its stable policies and continuous economic growth, said Wei Jianguo, secretary-general of the China Center for International Economic Exchanges (CCIEE) at the forum held in the capital city of south China's Guangxi Zhuang autonomous region.

Compared to some other developing countries, China's logistics network is relatively developed, Wei said, adding that some foreign entrepreneurs who moved their factories out of China after Chinese labor costs increased have returned to China.

The secretary-general also said China has advantages in terms of production chains and infrastructure.

Concerning problems arising from FDI in China, Wei said they should be solved through dialogue.

Wang Wei, head of the Wal-Mart China's general affairs department, said Wal-Mart lowered its costs thanks to a Chinese government-initiated program to link farmers' products and supermarkets directly.

"Enterprises alone don't work. You need infrastructure. If you don't have good infrastructure, industrial development doesn't work," said Edward Clarence-Smith, representative and head of the United Nations Industrial Development Organization (UNIDO) Regional Office.

For many Fortune 500 companies, the question is not whether to invest in China - the question is how, Wei said.

Sun Dan, vice president of Honeywell China, said the company is hoping to invest in China's new energy industry.

"Honeywell would like to play a big role in environmentally friendly projects in Guangxi given its preferential policies," Sun said.

With the start of the China-Association of Southeast Asian Nations (ASEAN) Free Trade Area (CAFTA) on January 1, more than 90 percent of China-ASEAN trade became tariff-free.

Huang Jie, managing director of Intel China, said Intel's business development in China benefited from Chinese government policies.

Intel set up a factory in Shanghai's Pudong and the southwestern city of Chengdu with Chinese government support, Huang said.

In the first half of the year, 12,400 foreign-funded enterprises were established in China, a year-on-year increase of 18.8 percent, and actual FDI into China climbed 19.6 percent to $51.43 billion, according to China's Ministry of Commerce (MOC).

In 2009, FDI into China hit $90.03 billion -- equivalent to 73 percent of the FDI inflows into the US, despite the fact China's economy in dollar terms is only one third the size of the US economy.

In 2010, there were 690,000 registered foreign companies in China which had invested more than $1 trillion, according to the MOC.

Every year since 2006, the PBG Economic Cooperation Forum has been held in Nanning. [Pan-Beibu Gulf members ink port agreements]

The PBG Economic Cooperation Zone comprises of China's Guangxi Zhuang autonomous region and the provinces of Guangdong and Hainan, along with Vietnam, Malaysia, Singapore, Indonesia, the Philippines and Brunei.

The PBG cooperation zone is a new sub-regional cooperation scheme under the China-ASEAN framework.

Government officials from China and ASEAN countries, executives of multinational companies and experts from think tanks attended the forum on how to further the cooperation among the PBG members.