Jurisdiction - China
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China – Going West In A Challenging Economy.

3 May, 2013

 

China reported a disappointing 7.7% GDP growth for the first quarter of 2013, confirming that the Chinese economy is facing headwinds.

 

For foreign investors already in China, this means a more challenging domestic market in 2013. Given rapidly rising wages in China, new investors are just as likely to consider elsewhere in South East Asian.

 

China, however, remains keen to attract foreign investment:

 

  • The Ministry of Commerce (MOFCOM) has recently indicated that China plans to further open up its service sector in 2013. The extent of any new concessions remains to be seen. However, the first quarter of 2013 has already seen more foreign direct investment (FDI) in the service sector than in the manufacturing sector.
  • China will also continue to promote FDI in Central and Western China, where land prices and wages are typically lower. With many migrant workers in Eastern China now preferring to return home to inland China, a skilled labour force should be more readily available.
  • Finally, China's central bank has indicated that it will further liberalize foreign exchange capital controls. This follows a partial relaxing of China foreign exchange controls in late 2012.

 

The number of new foreign investment enterprises established in China during the first quarter of 2013 fell slightly. However, the monetary value of the investments grew 1.44% year-on-year. The big winner so far, however, has been Western China, which saw FDI during the first quarter increase by over 18%.

 

 

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