China's eastern and coastal areas are again favorite destinations for foreign investors as some cities have set up pilot free trade zones, according to the Ministry of Commerce yesterday.
In the first seven months, foreign investors invested U.S.$76.6 billion in China, up 7.9 percent year on year. They also set up 14,409 new foreign-invested firms.
The majority of the investment, U.S.$65.4 billion, went to the eastern areas of the country, up 10.8 percent annually.
But foreign direct investment in central areas lost 7 percent to U.S.$6.7 billion in the January-July period, and that in western areas contracted 7.8 percent to U.S.$4.5 billion.
Lian Ping, chief economist at the Bank of Communications, said China's pilot FTZs, all set up in the country's eastern or coastal areas, were the main draw for foreign investors.
"The experimental policies, especially like the negative list approach, bring fundamental changes in management and make it much easier and transparent for investors," Lian said.
In the past one year, FTZs have become more familiar to investors.
The China (Shanghai) Pilot Free Trade Zone was considered a pioneer testing ground for various reforms to rejuvenate the world's second-largest economy since its establishment in 2013. Last year, FTZs were opened in three more cities — Guangzhou in Guangdong Province, Fuzhou in Fujian Province and Tianjin.
The latest data showed Shanghai's contracted FDI jumped 1.3 times to U.S.$34 billion in the first half of the year, mainly driven by capital being injected into its pilot FTZ.
Shen Danyang, a spokesman for the commerce ministry, said more foreign funds flowed into the country's service sector.
In the first seven months of this year, FDI in services expanded 19.6 percent to U.S.$47.5 billion, representing 62 percent of the total. FDI in the financial sector rose nearly four times and that for scientific research almost doubled.
In contrast, investment in manufacturing shed 5.4 percent to U.S.$23.8 billion, or 31.1 percent in the overall basket.
But foreign investment in advanced manufacturing such as telecom equipment making rose 3.6 times and that in chemical manufacturing jumped 62.1 percent during the January-July period.
The 28-country European Union invested U.S.$4.5 billion in China in the first seven months, up 18.4 percent year on year.
But the United States slashed their investment by 29.2 percent to U.S.$1.3 billion. Investment from Japan fell 24.2 percent to U.S.$2.1 billion.
In July, China's FDI grew 5.2 percent, compared with the gain of 0.7 percent in June.