Despite concern in regards to rampant Chinese wage inflation and emerging labour unrest, international companies continue to invest substantial amounts of additional money into Chinese operations.
China’s Foreign Direct Investment (FDI) rose 29% year over year in July according to the Chinese commerce ministry.
It drew $58.35 billion in foreign direct investment (FDI) in the first seven months of the year, up 20.7 per cent from the same period in 2009.
Why haven’t companies been scared away? This might be a clue:
Chinese wages have been rising, but productivity has been rising even faster in most industries and labour costs remain far lower than in developed economies. Investors are also attracted by the country’s modern infrastructure and the prospect of tapping its fast-growing domestic demand.
Interestingly, we’re also seeing a continued investment expansion into China’s less-developed hinterland, which is exactly how the nation should be developing as wages rise along the coast:
Much of the investment in the past has been concentrated in China’s export heartland along the coast, but Yao Jian, a commerce ministry spokesman, said that money was starting to flow to the interior where costs are lower.“The western regions are showing greater potential for attracting foreign direct investment,” he told a regular news briefing.
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