Market, China's Biggest Draw for Foreign Investment

By staff reporter JIAO FENG

As economic reforms enter a critical stage, it becomes increasingly urgent to accelerate industrial restructuring and eliminate outdated industrial capacity. Meanwhile rising wages are reducing the appeal of China's labor market. Under these circumstances, how can China continue to attract foreign investment?

 CPPCC member Zhang Xiaoji sat down with this reporter for an exclusive interview to discuss these questions. Zhang, who is also a researcher with Development Research Center of the State Council, said that China's population of 1.3 billion is a huge economic advantage. Whereas foreign enterprises were formerly attracted by cheap Chinese labor, they are now drawn to the country's huge market. Based on a survey he conducted with colleagues, multinational corporations are currently targeting their investments at entering key markets, rather than simply cutting costs. With a rapidly growing economy and rising household incomes, Chinese consumers are eager to consume more commodities and services at every level.  Further, though Chinese wages are higher than those in Southeast Asia, we continue to stand out in terms of economies of scale — when an investor seeks to establish a factory of 80,000 or even 100,000 workers, China is often the best choice. Industrial diversity is also a key factor, many parts of China boast a high concentration of different manufacturers that form a complete industrial chain. For these reasons, China continues to draw international capital despite rises in production costs.