Foreign direct investment (FDI) has contributed significantly to China's economic development because foreign companies can help the nation achieve its development goals and carry out major initiatives, although challenges remain, experts said Tuesday.
The economic impact of FDI, the operations of foreign-invested enterprises (FIEs), and the multiplier effects through their supply chains and the spending of employees were equivalent to 33 percent of China's GDP and 27 percent of China's employment from 2009-13, Michael J. Enright, professor of the School of Business of the University of Hong Kong, told the Global Times on Tuesday.
First-half FDI inflow reached 441.54 billion yuan ($65 billion), easing 0.1 percent on a yearly basis, according to the Ministry of Commerce (MOFCOM).
In June alone, 2,894 new FIEs were established, up 14.3 percent from a year earlier, the MOFCOM said.
Enright noted that FIEs have played a vital role in boosting the economic growth of specific Chinese cities.
For example, FIEs accounted for two-thirds of trade and industrial output and one-third of employment and tax revenue in Shanghai.
FIEs plus their multiplier effects accounted for far more than 50 percent of GDP and employment in Shenzhen, South China's Guangdong Province, according to Enright.
China has gradually opened its economy in recent years, although there are still some sectors that are less open than in other economies such as services, logistics and finance, he said.
Enright said that the challenge is to seek the benefits of expertise and technology from what some foreign companies can bring while meeting China's development goals.
"The best way to move the services sector in China forward is to do exactly the same thing that China did to move the manufacturing sector forward in the 1980s and 1990s. That means not only opening up to the best companies in the world but actively going out and attracting them to come into China," said Enright.
The Chinese government has stepped up efforts to open up its markets to foreign capital, and it is expected to offer same access to Chinese private companies, Xu Qiyuan, a senior research fellow at the Chinese Academy of Social Sciences, told a meeting in Beijing on Tuesday.
Xu said that "consistent, predictable guidelines are needed to advance China's opening-up."
The downward pressure that faces the Chinese economy and volatility in the financial market will affect the confidence of foreign investors, Xu said.
