by Fons1 via FlickrForeign Direct Investment (FDI) has been supporting China’s economic reform, but since 2007 its character has been changing, not declining, writes Shanghai-based lawyer Amy Sommers in the Financial Times.
Despite this phenomenal growth – or perhaps in part because of it – some observers have wondered whether FDI into China is slowing and shifting to greener pastures, with India, Vietnam and Brazil frequently mentioned as alternative destinations, each of which offers its own compelling reasons for investment. But China’s story is not so much about becoming unattractive for FDI as it is about its leaders’ concern that the country could be loved to excess.
Unlike the common assumption only a small part of China’s FDI came from Europe and the US, over 70 percent came from other Asian countries and regions, including Taiwan. In December 2007 the government introduced new guidelines, the foreign investment uncatalogue, steering those stream of capital into high-end manufacturing, R&D, regions and industries that are high on the central government’s political agenda. Amy Sommers:
The story about China’s FDI is not so much about declining FDI as it is about the challenge of attracting the desired type of FDI. And in that regard, the glass looks half empty. It remains to be seen whether or not 2009 will bring an improvement.