Service Sector in China a Magnet for New Foreign Direct Investment

Service Sector in China a Magnet for New Foreign Direct InvestmentThe fast growing service sector in China has become the magnet for overseas investors who are looking for new opportunities in the biggest emerging market. Around $50 billion in foreign direct investment have entered the sector during the first half of 2016, ro 8 percent more than compared to the same period in 2015 and represents a 70.4 percent of the to foreign direct investment in the country. But foreign direct investment in the manufacturing sector decreased by 2.8 percent and accounts for 28.3 of the total.

Even with the increase in salaries and land prices, the manufacturing industry lost its appeal to foreign investment as the emerging service sector has overtaken it. Confronted with a much slower economy, China is depending on their service sector to prop up growth and to create jobs which rolled out more favorable policies which give easier market access and fewer restrictions in foreign capital. The service sector have expanded 7.5 percent year on year, outpacing a 3.1 percent increase in the primary industry and a 6.1 percent in the secondary industry accounting for 54 percent of the overall economy or up by 1.8 percent compared to a year earlier.

Banks will be expecting more overseas capital to come into the service sector due to an expanding global outsourcing market and further opening of the country’s economy. Even with the slowdown, China still remains one of the world’s most important investment destinations. Foreign direct investment in the China’s mainland, excludes the investment in financial sector, increase 5.1 percent year on year or $69.42 billion with growth rate accelerating 3.8 percent for the first five months.

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