(Yicai) Dec. 4 -- Foreign direct investment into China, which has fallen this year, will pick up and flow into the service and advanced manufacturing sectors, according to a report by the chief investment officer of UBS Wealth Management.

Although there are signs that China-US relations are stabilizing, which may ease risks, technology and geopolitical frictions will likely continue to affect the flow of US direct investment into China, the report said today.

This means investment from the European Union, the Association of Southeast Asian Nations, Brasil, Russia, and India will become increasingly important. China has been strengthening ties with  them through regional trading blocs, its Belt and Road Initiative, and currency swaps to ease the pressure from so-called decoupling.

China is committed to further opening-up by easing access for Qualified Foreign Institutional Investors and Renminbi Qualified Foreign Institutional Investors, setting up more free trade zones, and shrinking the so-called negative lists for investment from abroad, the report said.

The world’s second-largest economy will grow between 4 percent and 4.5 percent in the next five to 10 years, thanks to mass consumption, green transition, and upgrades in technology and industry, the report also said, adding that these new driving forces to attract FDI. 

In the 10 months ended Oct. 31, FDI into China fell 9.4 percent from a year ago to CNY987 billion (USD138.3 billion), commerce ministry data showed. 

FDI has declined globally this year, and the US's tougher tech sector restrictions and concerns about national security have likely made foreign investors less willing to invest in Chinese assets. The China-US interest rate spread has also widened, resulting in less FDI flowing to the Asian country.

Editor: Martin Kadiev