Experts believe that foreign direct investment in China will remain in the current trend of decline, but in the long term, China will still be attractive for foreign investment and its share of global FDI may even increase.

The current decline in China's foreign investment is just a response to global decline in foreign direct investment. This year transnational direct investment around the world will be further reduced by 30-40%.

Zhang Yansheng, director of the Institute for International Economy, National Development and Reform Commission, thinks foreign direct investment in China will drop more than 20%.

On the other hand, in response to financial crisis, a number of countries have further relaxed restrictions on foreign capital admittance, and introduce preferential policies such as tax reduction. China is facing more fierce international competition to attract foreign investment.

Mei Xinyu, researcher at the Chinese Academy of International Trade & Economic Cooperation, said in this crisis, China's share of global FDI may even expect to increase.

According to a survey carried out by a foreign chamber of commerce, before the crisis, many business owners thought that countries like Vietnam were a better investment choice due to low cost of production. But after the outbreak of the financial crisis, many enterprises withdraw from Vietnam due to inadequate facilities and imperfect laws there, and moved to China.

Managing Director of Goldman Sachs (Asia) Fred Hu thinks that among China's new foreign direct investment, those gained by mergers and acquisitions accounted for a very small proportion, indicating that China still has great potential in attracting foreign direct investment. From a long-term perspective, they are still optimistic about China's foreign direct investment prospects.

Sun Jun from the Economic Information Department of China Council for the Promotion of International Trade (CCPIT) predicted that in the next 3 years, worldwide cross-border investment will maintain an upward trend, and China will undoubtedly become the first choice investment destination for large multinational companies.

By May 2009, China's FDI has been declining for eight months. This is the first time since the 1998 Asian financial crisis that the newly established foreign-invested enterprises, contracted foreign investment and actual use of foreign investment all continued to decline. The decline of these three indicators is expected to continue to expand.

By People's Daily Online