China will continue to be the next superpower no matter what others say
The tides are still flowing toward China.
Despite claims by the American and European Chambers of Commerce and Western media that China’s foreign investment environment is “deteriorating,” recent reports from the country’s Ministry of Commerce show otherwise.
Foreign direct investment (FDI) into China soared to 29.2% in July, year on year, with a total use of foreign capital that reached US$6.9 billion due to the 2,082 newly approved foreign-funded enterprises.
The report also showed that from January to July 2010, China gained a total of 14,459 newly approved foreign-invested enterprises, an amount that went up by 17.9% compared to the same period last year. Its actual use of foreign capital is said to be US$58.35 billion, an increase of 20.65% from the same time last year.
For three decades now, China has been one of the leaders when it comes to FDI. It is the second largest FDI destination according to China Daily. China will undoubtedly continue to be one of the world’s fastest growing economies.
Through Both Chambers
The American Chamber of Commerce in Beijing’s (AmCham-China) debate about the alleged decline in the Chinese investment environment arose when China approved the “Indigenous Innovation Policy,” said to be a disadvantage to foreign companies.
In April, China started implementing the Indigenous Innovation Policy, which emphasized that “all foreign enterprises are given equal treatment and that all their products are considered to be ‘Made in China,’” and the same rules of origin are applied to them as with Chinese products.
The AmCham-China conducted an Innovation Policy survey among China-based US companies in March. Results showed that 57% of hi-tech and IT companies think the policy will have negative effects on their businesses. And although the policy has not been fully implemented yet, 28% of the respondents said they are already affected by it.
Although AmCham-China’s 12th Business Climate Survey in April states that 82% of US companies still have a positive outlook with regards to doing business in China, the European Chamber of Commerce in Beijing reflects the growing sentiment to the contrary.
In its European Business in China Position Paper 2008/2009 published in September 2009, the group points out the worsening investment environment in China. The reason: China has been interfering with foreign companies through restrictions so its reform and opening-up policy is starting to level down.
According to Intensifying Debate Over the “Deteriorating Chinese Investment Climate” (Part 1) written by Fujitsu Research Institute senior fellow Jianmin Jin, the European companies are concerned about the “market access, legal and political transparency, and protection of intellectual rights.”
Western companies are not pleased with policies like the Innovation Policy, which is said to favor the Chinese companies over them.
Even the increasing cost of Chinese labor did not affect FDI. According to an interview by People’s Daily with Tsinghua University Institute of Taiwan Studies vice director Yin Cunyi, “China has obvious advantages over Southeast Asian countries in terms of labor quality, (supply) chain integrity, supporting infrastructure, government policies and standards.”
To further prove that Western claims are wrong, China received praises from the World Trade Organization for helping in global trade growth. The organization said that China has already helped more than what is expected of it.
China’s Ministry of Commerce said that, in 2009, its efforts at attracting FDI contributed to the global recovery.
The country was able to keep FDI up despite the global financial crisis last year. While global FDI went down by 40%, China suffered a decline of only 2.6%.
Print ed: 11/10