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Business confidence surveys show most European and American companies still believe China remains a significant investment destination. But they are facing an increasingly challenging business environment.
Seventy percent of European companies in China felt less welcome than they did 10 years ago, and 81 percent of American companies experienced the same.
Some attribute the change to China's economic slowdown and increased protectionism. Others believe China has grown less dependent on foreign investment, technology and management expertise. But what's really happening ?
"The challenges are real. Some essential factors such as the cost of labor and land are increasing. But on the other hand, it is true that China is not as dependent on foreign investment as before. China's fixed investment reaches dozens of trillions of yuan each year, but foreign investment only counts for less than 1 trillion yuan - a very small portion of the country's investment basket."
This leads to the question: Is China still the land of business opportunities?
"Investment in general manufacturing businesses is declining. These markets will become more and more competitive. But investment in high-end manufacturing is more than welcome in China, so is in service sectors. I think choosing to invest in areas that China is not good at yet will probably bring brighter market prospects."
Pei also cautions that the renminbi's stability and the uncertainties of the US Federal Reserves' interest rate decisions will pose challenges for foreign businesses in China in 2017.
