Foreign direct investment logs 7.9% growth in 2017

Policy measures boost inflows into high-tech sector

Foreign direct investment into the Chinese mainland soared to an all-time high of 877.56 billion yuan ($136.36 billion) in 2017, up 7.9 percent from 2016, official data showed on Tuesday.

The substantial rise in FDI illustrates the country’s continued efforts to improve the overall business environment for foreign investors, the Ministry of Commerce said in a statement on its website.

FDI into the high technology industry was notably strong, up 61.7 percent from a year earlier, the data showed. High-tech businesses such as electric, telecommunication and medical device manufacturing have become popular investment choices for global companies as China is undergoing an industrial and service upgrading boom.

“The steady momentum of FDI was attributed to government measures like easing restrictions in its 11 free trade zones and simplified procedures for investment entrance,” said Tang Wenhong, director general of the Ministry of Commerce’s Department of Foreign Investment Administration.

The number of newly established foreign companies rose to 35,652 last year, up 27.8 percent year-on-year, the ministry said in the statement.

Foreign companies, which comprised less than 3 percent of the total firms operating in the mainland, contributed to a quarter of the country’s manufacturing business profits and one-fifth of tax revenue, it said.

Last December, FDI into the Chinese mainland fell 9.2 percent year-on-year to 73.94 billion yuan.

The country would face relatively large external pressures to attract foreign investment in 2018, the ministry said in the statement.

As for non-financial outbound direct investment in 2017, the ministry’s data showed the figure decreased nearly 30 percent year-on-year to $120.08 billion, which covers 6,236 overseas businesses from 174 countries and regions.

“The sharp decline reflects the effective reining in of irrational outbound investment,” said Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation in Beijing.

Han Yong, commercial counselor at the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce, said outbound investment mainly flowed into sectors such as leasing and business services, wholesale and retail, manufacturing and information transmission last year. It did not go to the property, sports or entertainment industries.

China has been taking a host of measures to curb irrational offshore investment activities and ensure the authenticity of outbound investment.

In a document released last August, the State Council said overseas investment in areas including real estate, hotels, cinemas and entertainment would be limited, while investment in sectors such as gambling would be banned.

The National Development and Reform Commission, China’s economic policy regulator, released a new draft rule last November on outbound investment, including stipulations on the investment activities of firms established overseas by domestic companies.

Outbound investment to countries and regions involved in the Belt and Road Initiative totaled $14.36 billion in 2017.