China Must Improve Foreign Investment Climate, U.S. Group Says

China must allow foreign companies to invest more in sectors including telecommunications and health-care to avoid a slowdown in growth as wages rise, a U.S. business group said.

Improving the foreign-investment climate and removing the monopoly status of state-owned companies will boost productivity and economic growth, the American Chamber of Commerce in China said in a report today. Doing so will help China escape the stagnant growth that has befallen other rapidly industrializing countries, the group said.

“Productivity in the Chinese economy must increase and improve if China is going to develop beyond middle income status,” Amcham China President Chris Murck said at a briefing. “Many multinational companies in the U.S. and Europe and Japan and other places have been focused for a long time on how to increase productivity and how to manage costs.”

More foreign investment should be allowed in banking, health-care and telecommunications, according to the report.

Murck said that air pollution in China is “a truly negative factor” that has led some companies to bring back hardship premiums for their expatriate staff in Beijing.

In an annual survey released last month, the Chamber said U.S. companies operating in China believe rising labor costs are the biggest risk to their business in the country.

— With assistance by Michael Forsythe

Before it's here, it's on the Bloomberg Terminal.