China Is Becoming a Global Manufacturing Center

Despite the world economic downturn this year, China's economy maintained a robust development momentum that has attracted an inflow of large amounts of overseas funds and demonstrated China's appeal as a rising "global factory."

Statistics show that in the first eight months this year, direct overseas investment in the country totaled US$27.44 billion, an increase of 20.4 percent over the corresponding period last year.

China registered an average economic growth rate of 8 percent on a yearly basis over the last 20-plus years since it launched the reform and opening-up policy. And the country has been the largest recipient of foreign direct investment (FDI) among developing countries for eight straight years, with the annual FDI in the country standing at over US$40 billion.

Many international business tycoons hold that China is turning into a global manufacturing center.

The consensus was echoed by magnates of 30 multinational corporations and well-known figures from political and economic circles who attended the just-concluded Tianjin Mayor International Counselors Forum.

"I have never doubted that China will become the one of the leaders of the world economy," said Alexander M. Haig, Jr., former US Secretary of State who now is chairman of a US company.

A report on the global investment situation in 2001, initiated by the United Nations Conference on Trade and Development, shows that at present nearly 400 of the Fortune 500 enterprises have invested in more than 2,000 projects in China.

The world's major manufacturers of computers, electronic products, telecommunications equipment and petrochemicals have expanded their production networks into China, according to the report.

In the past several years, world-renowned multinationals, including Microsoft, Motorola, GE, JVC, Samsung, AT&T and Siemens have set up more than 100 research and development centers in China which constitute a new investment area of foreign businesses.

"The era of China is arriving," said Harald Lux, president of the OBI Group of Germany, citing the fact that China is the world's largest market for digital converters and the second-largest market for personal computers in Asia.

Many multinationals are optimistic about the development of China's economy and China's market following its imminent accession to the World Trade Organization.

In recent years, many developed countries have started to move their funds and technology-intensive manufacturing industries into developing countries to achieve more profits. And China can handle such industrial transfer, said Zhang Yansheng, a famous Chinese economist.

China's capability to carry out this sort of transfer is based on the expansion of economic development zones (EDZs), known as the "test fields" of China's reform and opening-up and which have become the most active area of the Chinese economy, said an official in charge of the country's EDZ development.

Statistics show that state-level EDZs used US$2.865 billion in the first half of the year, up 56.22 percent from last year's same period and two times the growth rate of the total FDI in China in the first six months this year.

Many multinational corporations have worked out plans to make China the base for marketing their products, purchasing raw materials, developing new products, product pricing and human resources development.

Jenny Wang, vice-president of Motorola, said that China boasts many advantages in developing manufacturing industries. Citing the telecommunications sector as an example, Wang said China will not only become the manufacturing center of telecommunications equipment in Asia, but also is expected to grow into a global hub.

Motorola has poured a total of US$3.7 billion into China, and by the end of September, Motorola's business volume in China accounted for 15 percent of the company's total for the nine-month period.

She said China's very stable policies, fast-growing economy and huge market are the major attractions to foreign investors.

Gan Chee Eng, vice-president of the US company Amway, said that China's WTO entry is definitely favorable for his company's business development, and that his company is evaluating the possibility to make China Amway's only production base in the world.

The global environmental protection giant Vivendi Group of France, which boasts an annual turnover of US$70 billion, invested 100 million yuan (US$12.04 million) in constructing China's first large-scale dangerous waste treatment center in Tianjin, a north China port city.

Sources with the group said that Vivendi is speeding up its pace to enter China's market and has listed China as one of the major regions for Vivendi's business.

Local economists said that in the course of a new-round of global economic transfer, the trend of manufacturing industries moving to China has become more obvious with each passing day.

They said that to accept large-scale foreign-funded manufacturing industries, China has many advantages in terms of market scale, social safety and stability, talented people and infrastructure.

At the same time, China's global-oriented labor-intensive industries have taken shape, they added.

(People’s Daily November 2, 2001)



In This Series

State Weighs Laws to Attract Foreign Investment

World Giants Speed Up China Investments

Sustained Increase Reported in Foreign Investment

Mergers: Prudence Pledged

References

Flow of FDI to Become a Torrent

State to Revise Related Laws for New FDI Model

FDI Rises as Accession to Trade Body Nears

Use of FDI Surged by 18 Percent in First Five Months

228 Major FDI Projects Published

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