Foreign investors target China's domestic market

Updated: 2011-12-09 08:38

By Lan Lan (China Daily)

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Foreign investors target China's domestic market

China has designated industries such as energy conservation and environmental protection, new information technology, advanced equipment and new energy as the keys to sustainable growth.

Meanwhile, the nation is committed to further opening up the service sector, also indicating business opportunities will abound in the coming years.

Over the next five years, China will guide foreign companies toward investing more in sectors including agriculture, high-end manufacturing and services, the 12th Five-Year Plan says.

Commerce Minister Chen Deming said China has plans to further loosen the restrictions on the service sector.

He said China was determined to continue opening up because competition is the best force to push reform and improve people's livelihoods.

Analysts said the government is studying the feasibility of opening more areas in the service sector, but they warned it would take time.

Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation, a think tank with the Ministry of Commerce, said China has opened up more than it had committed to when it entered the World Trade Organization 10 years ago.

"Most areas of the service sector have already opened up, just in different degrees and layers," Huo said.

"But the pace could be a bit faster. That would be a double-edged sword, posing more challenges to domestic companies while letting them grow faster in a competitive environment."

He said the government is studying the feasibility of opening further areas, such as transportation and some other public services.

Timothy Bond, chief economist for Asia Pacific at Bank of America Merrill Lynch, said the Chinese economy has not yet balanced its development of manufacturing and services.

"Developing the service sector is important for the Chinese economy and important for keeping consumers spending, but at the same time, service sector reform will take time," Bond said.

FDI jumped 18.6 percent year-on-year in the first nine months of this year to $86.6 billion. Foreign investors set up about 20,400 companies during the period, up 6.24 percent.

In the first nine months, US investments in China contracted 9.88 percent year-on-year and the European countries' investments decreased by 1.8 percent.

Many US and European firms are facing financial difficulties due to the turbulent financial market and that has affected their investment in overseas markets, including China, said Li Zhongmin, an investment researcher with the Chinese Academy of Social Sciences.

But the discouraging prospects for economic recovery in the US and Europe will make the growing Chinese market more appealing to investors from those areas, he said.

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