FDI surges by 5.2 per cent in first nine months in China

Rail freight costs are relatively high in China, hampering the development of the sector. Photo: Xinhua. Sketched by the Pan Pacific Agency.

BEIJING, Oct 17, 2020, China Daily. China’s actual use of foreign capital rose the first time in the first three quarters of the year, both in yuan and dollar terms, according to data released by the Ministry of Commerce on Friday, China Daily reported.

Foreign direct investment in China grew by 5.2 percent on a yearly basis to 718.81 billion yuan ($107.2 billion) between January and September. In dollar terms it increased by 2.5 percent to $103.26 billion.

China’s early recovery from the COVID-19 pandemic, new business models and growing size of the domestic market will prompt global companies to continue investment in China for long-term success, said Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges.

“Since the reform and opening-up policy has laid a solid foundation for an open economy, China will still be in a period of rapid advancement in industrialization and urbanization,” he said, noting the huge demand potential will provide continuous impetus to global businesses.

FDI in China rose 25.1 percent on a yearly basis in September to 99.03 billion yuan, the sixth consecutive month of growth on a yearly basis.

China’s nonfinancial outbound direct investment in economies involved in the Belt and Road Initiative also surged 29.7 percent on a yearly basis to $13.02 billion in the first three quarters, helping sustain confidence in these markets to support their long-term economic growth, said the ministry.

In the meantime, Chinese companies’ investment in these markets accounted for 16.5 percent of its total ODI. The share was up by 4.1 percentage points from the same period last year.

Zhang said China’s ODI structure continued to diversify between January and September, with investment mainly flowing into sectors such as leasing and business services, wholesale and retail, as well as petrochemicals and water conservation projects in the global markets.

China’s ODI fell by 0.6 percent on a yearly basis to 551.51 billion yuan during the first nine months of the year. Chinese companies signed 518 project deals with contract value of more than $50 million each in the first three quarters. The total value of these projects reached $124.88 billion, according to the ministry.

China Railway Construction Corp Ltd, or CRCC, signed an agreement for the construction of the Moscow-Kazan highway late last month. Valued at about $763.36 million, the project was the first national highway construction in Russia contracted out to a Chinese company.

Starting from Moscow, the highway will pass through the Russian capital, Vladimir and Nizhny Novgorod oblasts and terminate at Kazan, Russia’s sixth-largest city. Upon completion, travel time between Moscow and Kazan will be shortened to six and a half hours.

The 729-kilometer highway comprises eight sections. CRCC is responsible for a 107-kilometer section, which includes survey and design, construction of subgrades and pavement as well as culverts and bridges, and building of supportive service facilities such as toll stations and gas stations, said Wang Lixin, vice-president of the Beijing-headquartered company.

When the highway becomes operational, the transport time between China, Central Asia and Europe will be greatly shortened, Wang said. It will further drive economic growth of countries and regions involved in the BRI.

“China should pay more attention to make its ODI moves better suited to its ‘dual circulation’ development pattern by meeting domestic market needs via investment activities in overseas markets,” said Zhao Ying, a researcher at the Beijing-based Institute of Industrial Economics, which is a part of the Chinese Academy of Social Sciences.

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