'Targeting' by Beijing sees foreign firms limit China investment plans

Multinationals worried about being targeted in government investigations are scaling back mainland investment for the first time in a decade, according to a report on foreign-owned operations in southern China.

"High-level executives in the West are very concerned about 'unequal treatment' and/or 'targeting' be it perceived or real," said Harley Seyedin, president of the American Chamber of Commerce in South China, which published the report.

"This has lowered their confidence to a point where they would rather wait and see," he said.

Twenty-four per cent of companies planning to invest more than US$250 million last year either cancelled or postponed their plans, while total US dollar investment projections for the next three years dropped 16.9 per cent compared to earlier estimates, the report found.

However, overall confidence in the mainland's economic potential remained high.

The report's findings mirrored those from other foreign business chambers, as executives reappraise their spending commitments on the mainland in the face of a slowing economy, leaner competition and a tougher regulatory environment.