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China's service sector emerges as major foreign capital magnet

Updated: May 28,2021 10:16 AM    People's Daily Online

China's fast-growing service sector, which covers fields ranging from modern finance and intelligent logistics to digital economy, medical treatment and old-age care, has become a major magnet for overseas investors looking for opportunities in the world's biggest emerging market.

In the first four months of this year, a total of 14,533 new foreign-invested enterprises were established nationwide, an increase of 50.2 percent year on year and 11.5 percent over the same period in 2019, according to data from the Ministry of Commerce (MOC).

Meanwhile, China's actual use of foreign direct investment (FDI) (excluding banking, securities and insurance) surged by 38.6 percent on a yearly basis to 397.07 billion yuan ($61.55 billion) during the same period.

Of particular note, the actual use of FDI in China's service sector jumped by 46.8 percent year-on-year to 312.94 billion yuan, accounting for 78.8 percent of the total FDI in the country.

In fact, thanks to a series of measures taken to expand opening up, China's service industry has been the main engine driving the FDI growth for some time now.

During the past five years, the annual growth rate of FDI in China's service industry averaged 4.4 percent, with the proportion of FDI in the industry rising from 69.8 percent in 2015 to 78.5 percent in 2020, making China the biggest recipient of FDI in the world in 2020, showed statistics.

"Practice has shown that the increase of FDI in the service sector can help optimize and upgrade China's industrial structure, better meet the needs of the people for consumption upgrading, and make vital contributions to stabilizing foreign investment," explained Zong Changqing, director of the department of foreign investment administration of MOC.

This trend can be attributed to China's huge demand in the service industry, particularly in the field of high-tech services and modern services, said Li Jun, director of the Institute of International Trade in Services at the Chinese Academy of International Trade and Economic Cooperation, a think tank under MOC.

Li added that this can also be attributed to the optimism held by service-oriented multinational corporations in the development potential of China's service sector.

As the first step taken to penetrate China’s senior care industry, last year, the Lendlease Group, a global real estate and investment giant, unveiled its maiden senior living community in Shanghai.

"Since China has a huge market for old-age care, Lendlease would like to tap the market potential. In the next 5-10 years, we believe the market will be bigger along with improved concepts on offering services for the elderly," said an executive with Lendlease.