Chinese Cities Lead the Way in Attracting Foreign Investments

Of 21 leading cities, Shanghai and Beijing lead the way in attracting foreign direct investment  (FDI), according to Cities of Opportunity, an annual report on what makes cities thrive, jointly conducted by PricewaterhouseCoopers LLP and the Partnership for New York City.  Shanghai is ranked first in the total value and number of greenfield projects funded by foreign direct investment.  In these two categories, Beijing ranks second and fourth, respectively, among the leading 21 global cities.  Beijing and Shanghai outpaced even traditionally dominant world cities in the total value of these job-creating projects underwritten by foreign investment.

 

Cities of Opportunity took an in-depth look at the emerging picture of city life.  The report used 58 variables to analyse the performance of the 21 global cities.  To a great extent, the successes and shortcomings that surface validate the central thesis of the research - namely, that the more well balanced a city is for both businesses and residents, the better it will fare.
 
As implied in this year's study, New York City is faring well in comparison with other global capitals in the aftermath of 2008's economic downturn.  However, looking beyond this first financial recovery, which was led by Asia, Shanghai, Hong Kong and Singapore are making their mark as potential future centres of business, finance and culture, says the report.  A good case can be made that any one of them may prove dominant in the Asia Pacific region and perhaps beyond.
 
Shanghai, a historic centre of business, finance and culture in mainland China, sits at the fulcrum of what is expected to become the world's largest economy, according to the report.  The city is well situated to manage China's domestic capital markets and in fact ranked highest in attracting FDI both in terms of the number of greenfield projects and the total value of capital investment.  Attracting FDI is one of the variables in the Economic Clout indicator, the category that indicates a city's ability to influence world markets, attract investment and stimulate growth.  Additionally, Shanghai ranked highly in ICT (Information and communication technologies) competitiveness, one of the measurements of technology IQ and innovation.

 

"Shanghai is attracting an increasing amount of foreign investment," comments Nora Wu, PricewaterhouseCoopers (PwC) China Lead Partner for Shanghai.  "Although Shanghai has some way to go towards its goal of building an international financial centre, it has already embarked on comprehensive preparatory works.  Shanghai has a track record of achievement during the past decade, which makes people confident of its potential.  This confidence is further enhanced by the support from the central government."
 
The tiger growth cities of Beijing and Shanghai, says the report, have developing business structures that attract investors with the potential of China's burgeoning market, particularly for multinationals.  Beijing ranks third in "number of global 500 headquarters," following Tokyo and Paris, while boasting the highest percentage of working age population of any city, typical of tiger growth cities.  With the goal of becoming a world-class city, Beijing has started to build itself as a centre for international trade and attract multinationals to establish regional headquarters and stay for the long-term development.
 
"As a sign of its increasing economic clout, Beijing scores high in attracting foreign direct capital investment and number of global 500 headquarters," notes Charles Feng, PwC China Lead Partner for Beijing.  "This matches the recent target of transforming Beijing into a world city."
 
Unlike similar reports ranking urban areas, Cities of Opportunity declared no overall "winner."  All cities, after all, can improve in many ways.  The report's primary purpose is to guide business and government leaders who want to improve the competitive standing of the cities they represent.

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