Foreign investment in China continued to surge in the first quarter of this year. Realized foreign investment reached $2.74 million during the first quarter of the year, up 61.26% on an annual basis and in March alone foreign investment was $9.28 billion, up 39.6% year-on-year.

The number of newly set up enterprises declined. From January to March, government-approved foreign-invested enterprises numbered 6,949, down 25.26%, which means that large enterprises are increasing investment in some large projects. Commerce Minister Chen Deming said that the number of projects with an investment of over $30 million for the first two months increased 2.5 times the number of the same period last year.

In spite of worries that corporate income tax law that came into effect this year might impede the FDI flow, “the latest figures show the investment strategy of large enterprises were not influenced by these policy changes,” said Wang Zhile, director of the research center for transnational corporations under the Ministry of Commerce.

Experts said that the sustained increase in FDI indicates that China is still attractive for foreign investors despite the tax increase for foreign enterprises. “It shows that China remains an attractive market for multinationals” because of its large market, vast manufacturing capacity and relatively low costs, said Wang.

China now encourages foreign investors to participate in reforming State enterprises through mergers and acquisitions and expects more high-tech enterprises and restrict projects in heavy energy-consuming sectors.

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