In the first three quarters of 2017, Sichaun's foreign investment increased steadily, with the newly established foreign-funded enterprises growing by 60.47 percent year on year and the contracted foreign capital growing by 26.44 percent. The amount of foreign capital put in place rose by 5.3 percent. However, the traditional way of thinking for investment promotion, poor geographical location and less-developed logistics system have held up the pace of Sichuan in better using foreign investment. Sichuan should continue deepening the reform of "relaxation, management and services" to create policy, legal and credit environment favorable for foreign investors to do business in the province and make full use of foreign capital to serve the economic development.
According to statistics from Sichuan Provincial Department of Commerce, in the first three quarters of 2017, the province set up 406 new foreign-funded enterprises, growing by 60.47 percent year on year, with the contracted foreign capital reaching 3.59 billion U.S. dollars, growing by 26.44 percent year on year. The amount of foreign capital put in place reached 45.5 billion yuan, 5.3 percent more than in the same period of the previous year, equivalent to 6.603 billion U.S. dollars, 1.0 percent in the dollar terms, completing the annual target of 82.73 percent, 7.73 percentage points more than the set target. The amount of foreign capital used that was incorporated in the statistics of the department of commerce was 1.4 billion U.S. dollars, over 40 percent more than in the same period of the previous year. A number of the world top 500, such Linde, Wal-Mart and Apple have continued to increase their investment.
The westward movement trend of foreign capital has been accelerated. Sichuan enjoys good infrastructure facilities and rich natural resources. The market is big and the economic diffusion areas are large. It also has a strong contingent of science and technology personnel. The labor and land cost is relatively low. It has the ability of absorbing multinational investment on a larger scale. There is a hope that Sichuan will become a place to take in industries transferred from the developed coastal areas and a base for matching facilities in production, agricultural product processing base and a labor export base.
According to Huo Weidong, professor of the Southwest China University of Economics and Finance, there are some unfavorable factors in the use of foreign capital.
One is the low economic development level and weak general competitive power and a small amount of overseas capital used. Some places are weak in the awareness and ideas of developing an open-type economy. There is a lack of management personnel that know the international rules. The geographical environment is poor. The industry foundation and matching abilities for using foreign capital are week. The level of industrial clustering is not high. The modern logistics is not well developed. The investment promotion systems, such legal environment, administrative environment, credit environment, supervision system and administrative management system remain to be improved. The second is the narrow areas for foreign investment. The overseas investment is mainly concentrated on Chengdu plain, accounting for over 80 percent and little has been invested in the hilly areas, basins and mountainous areas, resulting in a serious imbalance of investment.
Related investment promotion organizations, experts and scholars and overseas-funded enterprises all agree that Sichuan must strengthen work in the following three areas if to create a better environment for foreign investors to do business:
1. Optimize the environment for attracting foreign investment and improve the policies and legal system. Specifically, the province must deepen the reform of "relaxation, management and services", actively creating a more legalized, internationalized and facilitation business environment, building a legal and policy system in line with the common international practice and a fair and just legal environment. It must improve the matching local laws and regulations concerning investment, acquisition and merger and risk investment. It should standardize the preferential policies in all places and raise the continuity and transparency of policies. At the same time, it should continue to improve the investment conditions, with emphasis on energy supply (especially the gas supply in winter), communications and transport and outlets to sea. It should speed up the building of E-ports and port information platforms to really improve the abilities and efficiency in customs declaration.
2. Expand new areas for foreign investment and intensify the guide to foreign capital. It must expand the opening of basic industries, manufacturing, services and capital market and encourage foreign capital to get involved in the reform of industries and enterprises except in areas banned by the state. It must strengthen investment promotion and improve the efficiency in attracting foreign investment. It must dig deep into the sources of foreign capital. It must display the advantages of country-specific industrial parks and zones in concentrated attracting of foreign investment. It must display the leading role of overseas economic and trade funds and the leading role of fiscal funds in attracting big and strong enterprises and in the transition and upgrading of the manufacturing industry.
3. Improve the way of using foreign investment, giving full scope to the carrier roles of the pilot free trade zones in attracting foreign investment and encourage overseas business people to set up new enterprises. The province must make use of the leading role of foreign capital in technical progress and adjust the industrial structure and encourage overseas investors to run enterprises by way of joint venture, cooperative enterprises and independent investment. It should encourage overseas investors to expand the scale of the use of foreign investment by way of using profit to increase investment. It should encourage overseas investors to get involved in the reorganization and transformation of state-owned enterprises by way of acquisition and holding participating shares and re-investment. It should encourage overseas-funded enterprises to set up their regional headquarters, R&D centers, procurement centers and training centers and other types of operating centers and production bases in Sichuan. It should strengthen strategic cooperation with enterprises in Sichuan and encourage multinational corporations to transfer their industries and make long-term investment and raise their localization levels. Besides, the province should value the international free aid and strive to win more foreign capital to support the development of the local public welfare undertakings.
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