Friday, June 22, 2018 | ePaper

Economic Watch

Industrial upgrade, less restrictions create opportunities in China

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Xinhua, Beijing :
After an accumulative investment of over 6 billion euros in China over past two decades, the world's leading chemical group BASF has recently inaugurated a new plant for emollients and waxes in Shanghai.
With an investment of 150 million yuan (about 22 million U.S. dollars), the project is BASF's largest ever investment in emollients production in Asia Pacific. The company has also set up its Innovation Campus Asia Pacific in Shanghai.
Against the backdrop of a mildly retreating foreign direct investment (FDI), BASF's expansion shows foreign investor confidence in the structural upgrade of Chinese economy.
FDI on the Chinese mainland dropped 3.7 percent year on year in May to 54.67 billion yuan, extending a downward trend, fresh data from the Ministry of Commerce (MOC) showed.
The decline followed a mild retreat in the previous month, when FDI was 4.3 percent lower than last April, in contrast with a 6.7 percent increase in March.
Despite a drop in the overall FDI, foreign investment in the mainland's service sector, especially high-tech and modern service industries, continued steady growth.
In the first five months, 12,159 new foreign-funded enterprises were established on the mainland, up 11.9 percent. The high-tech service sector attracted 48.64 billion yuan of foreign capital, up 20.5 percent year on year, according to the MOC.
Meanwhile, for the manufacturing sector, FDI in communication equipment manufacturing jumped 46.6 percent in the five-month period.
"Foreign investors are gradually quitting labor-intensive industries and shifting to capital and technology-intensive industries in China," said Professor Sun Lijian from Fudan University.
Thanks to structural upgrades which have cushioned long-term downward pressures, China's economic growth held steady in the first five months as key service indicators rose rapidly.
The National Bureau of Statistics (NBS) reported May growth of 8.1 percent for the service sector Wednesday, flat with April and extending the rally since the beginning of the year. The data confirmed the message that the ongoing growth model transitioning was providing new impetus to the world's second largest economy.

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