China economy

Shanghai remains investment destination of choice as reforms attract US$21.5b in first half

PUBLISHED : Wednesday, 18 July, 2018, 7:00am
UPDATED : Wednesday, 18 July, 2018, 7:00am

The Shanghai city government is hoping the rebound in foreign inflow of capital in the first half will continue for the rest of year as it ploughs ahead with efforts to further open up the market.

In the first six months of the year, contracted foreign funds, an indicator of future commitments of capital, grew 18.1 per cent to US$21.5 billion in Shanghai, as the premier commercial hub signed more than 2,100 projects with overseas investors in the period, according to figures released by the city’s statistics bureau on Tuesday.

It reversed a decline of 47 per cent from a year earlier.

“This year [we have seen] an improving trend of attracting foreign investments,” said Tang Huihao, deputy statistics chief of Shanghai government. “Citywide, both contracted and actual foreign investments reversed from declines seen a year earlier.”

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Actual foreign direct investments to the city increased to US$8.6 billion, up 6 per cent from a year ago. It fell 7 per cent in the same period a year ago.

Tang said the city can continue to attract foreign capital because the municipal government is actively following up on local implementation of Beijing’s pledge to lift restrictions on foreign investors, spanning from advanced manufacturing to financial sectors, against the backdrop of simmering trade rows between China and the United States.

Looking ahead, Tang said foreign inflows can continue to rise in the second half because of the ongoing reforms.

Earlier this month, the city’s municipal government unveiled 100 measures that mainly focus on opening-up in finance, industrial systems, intellectual property rights protection, imports, and business environment.

Also this year, the Shanghai authorities pledged to cut business red tape, including slashing the time needed to launch a new company, in an attempt to give the eastern commercial powerhouse an edge in wooing more international trade and investment.

Last week, US electric carmaker Tesla said it will build a wholly owned plant to produce 500,000 cars a year in Shanghai – its first overseas manufacturing facility.

The city government has vowed to support the Tesla project, the biggest foreign investment manufacturing project in Shanghai.

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The city has been one of the biggest recipients of foreign capital in the past three decades, emerging as a major economic powerhouse in China. But the coastal city is also facing challenges including rising labour and land costs.