Foreign investment record as Shanghai bucks national trend

SHANGHAI attracted a record amount of foreign investment in 2012, bucking the trend of shrinking foreign direct investment nationwide, powered by growing financial services and the number of business headquarters.

The city took US$15.2 billion in FDI in 2012, up 20.5 percent from a year earlier, the Shanghai Municipal Commission of Commerce said yesterday.

That compared to a 3.6 percent decline in China in the first 11 months of last year from the same period in 2011, according to the National Bureau of Statistics.

"Investment in the service industries made up 83.5 percent of the city's total FDI, highlighting the city's enhanced economic focus on the service sector," the commission said.

Investment in the financial sector in Shanghai surged 70 percent from the previous year, while investment in headquarters of multinational companies jumped 30 percent from 2011.

By the end of 2012, the city was home to 265 investment companies and 403 regional headquarters of multinational companies, leading all other Chinese cities.

Shanghai has issued a package of new policies, including subsidies and duty exemptions, to encourage more MNCs to set up corporate headquarters and research and development centers.

Management resources

Wang Xinpei, deputy director of the commerce commission, said the city aimed to use the policies to encourage foreign-funded companies to divert their management and innovation resources to Shanghai in order to transform the local economy amid the global recession.

Shanghai's growing attractiveness in aspects ranging from quality of life to the business environment has drawn entrepreneurs and foreign companies to settle in the city, Shanghai Daily found in a survey on 26 top regional officials of multinational organizations and enterprises in December.

"Shanghai has evolved into a modern, cosmopolitan metropolis, providing not only a good environment for residents to work and live, but also a strong and sound infrastructure for businesses to thrive and prosper," Andrew Au, CEO of Citi China, said.

Shanghai ranks first among 25 global financial centers in attracting FDI, both in the number of projects and the amount of capital invested, PricewaterhouseCoopers said in a report in November.

The city came fifth in terms of economic clout, but improvement is needed in the quality of life, such as the environment and education, to retain talents, according to the report.

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