China witnesses sharp increase in FDI

BEIJING: Foreign Direct Investment (FDI) in China has had a sharp increase in the last four decades, says a report released at the ongoing first Qingdao Multinationals Summit in China’s Shandong Province.

It was result of the fundamental changes in the national reforms and opening-up policy. Foreign-invested enterprises (FIEs) account for less than 3 percent of China’s total enterprises, but they contribute nearly half of the foreign trade volume.

Gwadar Pro media network, quoting the report released by the Ministry of Commerce, stated that multinationals have witnessed the historical achievements of China's reform and opening-up, made important contributions to China's economic and social progress.

The reform and opening-up enables multinationals to enter China. In 1992, China's opening-up was brought to a climax after Deng Xiaoping, chief architect of China's reform and opening-up, made his famous speeches in South China. Later, multinationals' investment in China entered a stage of rapid development.

Multinationals, by taking advantage of those opportunities and a better environment, steadily increased their investment in China.

The actual use of FDI increased from US$ 111.7 billion in 2012 to 138.31 billion in 2018. The average annual actual use of FDI was US$ 132.7 billion, an increase of 52% over the previous period.

In the same year, among the total number of newly established FIEs, the service industry accounted for 88.7%, and the manufacturing industry accounted for 10.2%. Among the total actual use of FDI, the service industry and manufacturing industry accounted for 68.1% and 30.5%, respectively. However, the actual use of FDI in the manufacturing industry rebounded, with a year-on-year increase of 20.1%, and its share increased by 4.8 percentage points over the previous year. Among them, high-tech manufacturing increased by 35.1% year-on-year.

By the end of 2018, China had established a total of 961,000 FIEs, with the actual use of FDI of US$ 2.1 trillion. The number of existing FIEs accounts for about 3% of the total number of enterprises in the country.