Question

Why China remains magnet for foreign investment?

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Answer 1

During Jan-Aug 2019 period, FDI grew 6.9% (Y-o-Y) to 85.36 bn US $.

FDI inflow grew 3.2% (Y-o-Y) to 89.26bn US $.

It shall be noted that China is considered the most attractive destination for foreign investment. This is because of the following reasons:

1) China is the future as it is fast-growing and provides lot of avenues for making fortunes for a multinational company

2) The Chinese government has kept reducing restrictions and limits on foreign investment's access to a wide range of sectors, paving ways for hassle-free foreign direct investment experience. A total of 27,704 new foreign-funded enterprises were established in the first eight months of 2019

3) There is improving regulatory environment in China and that the country's operational environment for foreign companies showed significant signs of progress

4) The Chinese market is a huge consumer market

5) Availability of cheap labor

6) The sector such as Automobiles, manufacturing and mobile communication are most attractive FDI destinations in China

7) China scrapped investment quota limits for Qualified Foreign Institutional Investors (QFII) and Renminbi QFII

8) Recently in 2019, China approved a draft regulation at a recent State Council executive meeting, promising equal treatment of domestic and foreign businesses regarding government funding, land supply, and tax and fee cuts.