An improved investment environment is luring US investors to China's second- and third-tier regions, according to the 2007 White Paper released yesterday.

"The investment climate of the second- and third-tier regions has improved, and represents an opportunity for US firms seeking to build domestic market share," said the report, released by the AmCham.

It attributed US investors' interest in second-tier markets to the increasing demand created by urbanization and improved infrastructure and logistics in new inland cities. Two-thirds of AmCham members surveyed said they wanted to increase market reach, when asked why they were expanding beyond the main commercial centers.

"As the current (Chinese) leadership shifts emphasis to a more balanced economic agenda, China has renewed its emphasis on building infrastructure and stimulating the economies of poorer inland regions," said AmCham, adding the policies had encouraged investment in central and western China.

In 2006, China had amassed about $70 billion in foreign investment, with most funds still going to large cities like Shanghai, Guangzhou and Beijing.

Between 1991 and 2000, almost 22 percent of registered foreign firms were located in China's central and western regions, but the number dropped to about 15 percent between 2001 and 2004, according to statistics from Global Insight China Regional Service.

The White Paper noted an increasing proportion of registered foreign firms have chosen to return to coastal regions after venturing out to China's central and western provinces.

AmCham suggested officials in central and western China ensure the necessary conditions to stimulate a healthy business environment, consistent with China's coastal regions.

Editor: Yan