BEIJING -- Jiangsu province, one of the leading provinces in economic, scientific, and technological development in China, is undertaking a drastic change in use of foreign investment amid the economic slowdown. Driven by the overall deepening reform in China, Jiangsu province is exploring an innovative way to attract foreign investment through creating better investment environment in addition to favorable taxation and industrial policies.
-- A year of change
The year of 2015 witnessed a historical change in foreign investment in Jiangsu province.
With 234 friendly cities in 48 countries of the world, Jiangsu province ranked No.1 in the country in terms of using overseas capital for 12 years in a row by the end of 2014. However, Jiangsu province lost its leading position in 2015 with a sharp decline of 13.8 percent year-on-year in actual use of overseas investment.
Experts in the province attributed the nosedive to the falling manufacturing assets. Jiangsu, commonly recognized as a big manufacturer, has long amassed a large amount of overseas assets. But, the rising production costs in the Yangtze River Delta has in recent years forced the foreign manufacturers, who used to favor low manufacturing costs in China, to move out and find elsewhere for their new factories, resulting in a big drop in 2015.
-- Trend of foreign investment use in Jiangsu
Jiangsu province is losing its original advantages attracting foreign investment and has encountered obstacles in traditional way of using foreign investment amid the profound change in global economy brought by the international financial crisis.
Despite the gloomy economic environment, Jiangsu has enlarged use of foreign investment in service industry, marking a positive trend.
According to statistics, among total 7.02 billion U.S. dollars of overseas investment used in 2015 in Jiangsu, some 2.67 billion or 38.1 percent went to the service industry. Some 46.6 percent of service projects in Jiangsu have used foreign investment in 2015, 3.1 percentage points higher than previous year.
This trend is more prominent in Nanjing, the provincial capital. Data provided by the Nanjing Municipal Bureau of Commerce show that the amount of overseas capital used in Nanjing's service sector rose from 45.7 percent in 2006-2010 to 63 percent in the 2011-2015.
Emerging industries and modern service industry have become the new destinations of overseas capital in Yancheng. In 2015, the number of projects in service industry that used overseas capital came to 62, accounting for 42.47 percent of total in Yancheng.
-- Favorable policies for foreign investment
Jiangsu province has outlined a string of favorable policies for foreign investment.
1) Industrial Encouraging Policies
The province encourages major coastal areas to develop pelagic fishing industry and build international fishing groups.
Local enterprises engaged in overseas engineering contracting are encouraged to try diversified businesses and to cooperate with each other to undertake large projects.
Jiangsu aims to form at least 50 Jiangsu-based multinational companies with considerable international competitiveness by the end of 2015, at least five of which should have strong international influence.
It encourages local textile, chemical and cement companies to set up branches abroad, and industries of photovoltaic and shipbuilding to set up research centers, marketing institutions and industrial parks abroad.
Resource exploitation companies are encouraged to build overseas resource bases of iron ore, coal, wood, non-ferrous metals, agriculture and fishing.
Agricultural companies are encouraged to build abroad production, purchase, storage, processing and transportation system for agriculture products.
2) Regional Encouraging Policies
Under a provincial government document, by 2017, Jiangsu's northern area aims to realize industrial added value of more than 1,000 billion yuan, with an annual average growth of at least 15 percent in 2013-2017; the advanced manufacturing industries should contribute more than 40 percent of the overall industrial output value; the high-tech industries should account for at least 35 percent of the output value of major industries; the strategic emerging industries should post an annual average growth of 20 percent.
Under the document, Xuzhou city will focus on transforming traditional industries and cultivating high-tech industries; Lianyungang city will develop harbor industries such as chemical refining and metal smelting so as to form a modern harbor industrial base; Huai'an city will bring in investors mainly from Taiwan, Zhejiang and Fujian while developing the salt business with its large reserves of rock salt resources; Yancheng city will focus on lifting levels of auto, equipment and textile industries and developing harbor industries such as petrochemical, paper making and wind power.
Tips for foreign investment
As Jiangsu province aims to expand international cooperation in industries of textile, chemical engineering, metallurgy, cement, PV, shipbuilding, information, biological medicine, new energy, Internet, high-end equipment and environmental protection, overseas investors can pay attention to opportunities in these industries.
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