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China Continues to Attract Foreign Investors Despite Changing Investment Pattern

| Oct 17, 2014 05:50 AM EDT

Collin admits that it is still not known whether both Chinese companies are receiving direct funding from foreign investors.

Along with the development of China's economy is the radically changing reason why the country is attractive to foreign companies.

In 2013, China had $101 billion inbound investment, making it the highest among any developing economy, revealed the United Nations. However, as China developed, the pattern of investment drastically changed, and the trend is expected to continue.

In terms of international comparison, China is not a low-wage economy anymore. Currently, only 30 percent of the population in the world lives in countries whose per capita GDP is higher than that of China, according to World Bank data. Except Malaysia, every developing country in Southeast Asia and South Asia has a lower per capita GDP than China.

Many exporters consider the unrivalled skill of China in major manufacturing fields as its main attraction. In 2010, most of the exports in China were also from foreign-owned companies. Among small and medium-sized exporters, Chinese-owned companies were more dominant than those owned by foreign businesses.

One example is the original success of Alibaba, which created the internet systems connecting Chinese companies to their foreign markets.

When the world was suffering from the financial crisis in 2008, 153 among the top 200 exporting companies in China were foreign-funded, which shows the crucial role of foreign investment among large exporters.

According to a forecast based on the survey of analysts conducted by Reuters, China's economy possibly grew 7.2 percent in the July-September period, which was considered the weakest since the first quarter of 2009.

In the first six months of 2014, as compared with the same period in 2013, cash balances at 726 companies rose 13 percent as companies had to limit investment due to uncertainty.

While slower investment growth and a housing recession gradually reduced activity, China's economy is expected to grow at its slowest rate in five years in the third quarter of 2014.

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