Cross-border merger and acquisition checking procedures need to be simplified if the country is to remain competitive globally as a top inward-investment destination, trade officials urged on Tuesday.

China became the world’s largest recipient of foreign direct investment last year, with capital inflows rising by 3.7 percent year-on-year to $129 billion, according to the Chinese version of the World Investment Report, released at the ongoing 2015 China International Fair for Investment and Trade.

However, the report revealed that more than 70 percent of the Chinese mainland’s FDI was from the Hong Kong Special Administrative Region, and developed economies such as the United Kingdom, France and Japan invested more in Southeast Asia and India, taking advantage of the cheaper labor costs and lower material prices in those markets.

Zhan Xiaoning, director of investment and enterprise of the United Nations Conference on Trade and Development, said that while a recovering United States economy should help attract more FDI this year, China should also take more measures to allow foreign capital to enter its key service sectors, such as healthcare, transport, logistics and retail.

The report suggests that while South Korean investment in China jumped by 30 percent and European Union investment registered a slight increase, FDI flows from the US and Japan dropped by 21 and 39 percent, respectively.

Cao Hongying, deputy director-general of the foreign investment administration at the Ministry of Commerce, said China’s “going global” strategy – which focuses on the export of its mature industries – was already being implemented within the Belt and Road Initiative and that is likely to play an important role in improving two-way investment.

Proposed by China in 2013, the flagship economic initiative is a trade and infrastructure network that includes the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The network connects Asia, Europe and Africa and passes through more than 60 countries and regions with a population of about 4.4 billion.

Official data shows 14,409 new foreign-invested enterprises were approved between January and July this year, an 8.8 percent rise on a year-on-year basis. They were worth $76.63 billion, a 7.9 percent increase on the same period.

“Further simplifying cross-border merger and acquisition checking procedures would be a wise idea to attract more FDI, as that would encourage more foreign investors to build manufacturing facilities, and research and development centers,” said Cao.

Ge Shunqi, a professor in international economics at Nankai University in Tianjin, said even though there was a rise in FDI – 55 percent of which was in China’s services sector, particularly retail, transport and finance – inflows to the manufacturing sector dropped 33 percent, especially into industries that are sensitive to rising labor costs.

He highlighted the development of new-energy vehicles, hydropower, wind power, nuclear power and LNG-powered ships, as benefiting particularly from international investment and knowhow.

(China Daily 09/09/2015 page16)