China still requires large quantities of foreign direct investment in the coming years in order to sustain its rapid economic growth, a high-ranking foreign trade official said yesterday.
Chai Haitao, director of the Chinese Academy of International Trade and Economic Cooperation, said that overseas investment, which last year totaled US$72.4 billion, has brought China a host of advantages such as capital, technology, jobs and improved skills.
New opportunities for overseas investment in China should meet the needs of the domestic market, such as the country's requirement for technological innovation, which is regarded as vital to boosting competitiveness, said Chai. He made the remarks at the International Cooperation Summit for Asia-Pacific CEOs & Provincial Governors and Mayors, held in Wuxi by the Asia-Pacific CEO Association and the local government.
Technology-intensive manufacturing industries, such as auto machinery, semiconductors and computer equipment, as well as commercial services, tourism, telecommunications and transportation, will attract growing amounts of overseas investment, noted Chai.
His academy, which is affiliated to the Ministry of Commerce, has investigated multinational firms' investment intentions in China.
The study revealed that 45 percent of multinationals prefer to invest in the Yangtze River Delta, which includes Shanghai and major cities in Jiangsu and Zhejiang provinces.
The Beijing-Tianjin-Hebei area is ranked as the second most preferable region, followed by the Pearl River Delta neighbouring Hong Kong.
"This shows the close integration of international investment with China's market demand," said Chai.
Coastal areas have already established competitive industrial groups by absorbing large amounts of overseas investment, so the new round of overseas investment will focus on the technological research and service sectors, which are crucial in boosting the development of traditional industries, according to Chai. Therefore, coastal regions remain the best choice for overseas investors.
His views were echoed by Hu Jingyan, director of the Ministry of Commerce's department of service trade, who said that the total value of China's service sector, usually including banking, insurance and transportation, only accounts for 40 percent of the country's gross domestic product. This proportion is around 70 percent in developed economies.
(China Daily September 21, 2006)