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China Remains an Attractive Destination for FDI

China remains attractive for foreign investors, with actual foreign direct investment (FDI) inflows into the country totaling US$42.78 billion from January to May.

The figure reflects an increase of 54.97 percent from a year earlier, the Ministry of Commerce said.

FDI stood at $7.76 billion in May alone, up 37.94 percent year-on-year.

China is still the most attractive destination for foreign direct investment, according to a latest survey by Ernst & Young among business leaders.

The survey shows global investments are being distributed more equally across the world. But it said although 41 percent of survey respondents ranked China as the most attractive investment destination, the country still draws less than 8 percent of global FDI inflows, according to the United Nations Commission for Trade and Development.

While only 33 percent of respondents ranked Western Europe as their top choice for investment, the region still accounts for 37 percent of global FDI inflows.

The Ministry of Commerce said 11,915 new overseas-funded enterprises were established in the first five months this year, down 20.95 percent from a year earlier, with 2,425 new overseas-funded enterprises in May, down 10.94 percent.

Hong Kong, British Virgin Islands and Singapore ranked the top three sources of direct overseas investment in the first five months.

FDI from US companies increased 25.09 percent year-on-year during the first five months although the number of newly founded US companies fell 28.13 percent. New EU-funded companies fell 24.85 percent from a year earlier, but investment increased 35.2 percent.

Greenfield industries remain a major draw for foreign investment, but merger and acquisition has become increasingly important as well, according to Qiu Hong, assistant minister of commerce.

"China will keep the policies stable for M&A by foreign companies and encourage more such deals in hi-tech and environment-protection industries," Qiu said yesterday.

(China Daily June 13, 2008)

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