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Wednesday, March 2, 2016, 10:06

Study points to sound economic prospects

By ZHENG CAIXIONG

Despite a sluggish global economy, foreign companies remain confident about the direction of the Chinese economy and market, with reinvestment budgets set to increase by more than 8 percent in southern China this year.

According to the studies conducted by the American Chamber of Commerce in South China (AmCham South China), reinvestment budgets appear to be recovering from the 2015 slump, and AmCham South China member companies stand to reinvest more than US$13 billion from profits this year.

"More than 93 percent of the participants reported either being profitable already or expecting to reach profitability within two years,” said the studies released by AmCham South China on Tuesday.

The studies include the 2016 White Paper on the Business Environment in China and the 2016 Special Report on the State of Business in South China.

Harley Seyedin, president of the AmCham South China, said the studies show that foreign companies have strong confidence in the Chinese economy and market.

"And the studies also clearly demonstrate the need for accelerated reforms and the most promising action by the Chinese leadership is its move to introduce supply-side reforms,” Seyedin told a news conference in Guangzhou on Tuesday.

"It is clear that China needs to put growth on a sustainable track and that there needs to be renewed efforts for economic restructuring. Therefore, we feel the Chinese leadership’s call for supply-side economic reforms, announced in late 2015 as a strategic framework for the 13th Five-Year Plan (2016-20), is particularly timely,” he said.

This year, 83 percent of participants ranked the business environment in South China as “good or acceptable”, "very good” or “outstanding”.

Meanwhile, 37.6 percent of the participants felt the business environment in South China had improved over the past 12 months, according to Seyedin.

And approximately 82 percent of participants reported having hired additional employees to take advantage of the labor market. AmCham South China estimates that this resulted in its members hiring 993,506 new employees across China in 2015.

AmCham South China has more than 2,300 corporate and individual members in the southern Chinese region, which borders the Hong Kong and Macao special administrative regions. And the poll aggregates and analyzes the experience of 246 companies which participated in the chamber’s annual state of business study.

When asked about the influence of the Bilateral Investment Treaty between China and the United States on investment budgets, nearly 30 percent of the participants expected their investment budgets to increase, with 8 percent increasing their budgets by US$250 million or more, which indicates that they see the BIT as an opportunity for their business development.

Andy Rusie, finance vice-president in China for Mead Johnson Nutrition & Co LLC, said Chinese economic development will continue to provide myriad business opportunities for foreign companies in the following months.

"China’s gross domestic product still grows at about 7 percent,” he said.

Meanwhile the Chinese government has introduced a package of policies to stimulate its economic growth, he added.

And Richard Ren, vice-president of corporate affairs at Vitasoy (China) Investments Co Ltd, said he has confidence in the Chinese market in the years to come.

"Vitasoy has enjoyed annual double-digit growth in the mainland in the past decade,” Ren said.

Guangdong, one of the country’s economic powerhouses, set its growth target during the 13th Five-Year Plan at 7 percent, maintaining medium-to-high speed development, according to Guangdong Governor Zhu Xiaodan.

In his report to the provincial legislature earlier this year, Zhu urged relevant departments and cities in the province to do what they could to improve their levels of foreign investment.

The province saw its GDP grow by an average of 8.5 percent annual during the 12th Five-Year Plan which ended last year.

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