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China has principal attractions like low-cost labor and an enormous domestic market of more than 1.2 billion consumers. The investment climate has been opened up gradually. In the 1980s, foreigners were restricted to export-oriented joint ventures with Chinese firms. In the early 1990s, they were allowed to manufacture goods for sale in the domestic Chinese market; and by the mid-1990s; the establishment of wholly foreign-owned enterprises was permitted. China's accession to the WTO forces the government to open up the services sector.
In 2004,China being one of the fastest-growing economies in the world attracted actual FDI of more than US$60.6 billion, up 13 per cent from the previous year.
Foreign direct investment (FDI) in China dropped slightly in the first five months of the year 2005-06 but within a reasonable fluctuation.
China attracted US$22.4 billion of FDI over the period, a 0.79 per cent decrease from the previous year, according to statistics published by the Ministry of Commerce.
Contracted direct investment to China, which indicates the future trend of FDI flow rose nearly 15 per cent over last year to US$65 billion.
The ministry said China approved 16,437 new foreign-invested ventures between January and May, down 4.75 per cent year-on-year.
Based on official information, the country realized FDI of US$4.89 billion in May, a comparatively large decrease of some 22 per cent over last year.
Although all the figures for the period show a declining or slowing growth rate, experts said the average investment in each project was increasing.
"I would like to contribute the slowdown to the large amount of FDI last year," said Lu Jinyong, an investment researcher with the University of International Business and economics in Beijing.
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