The time is ripe to invest in China where profit margins are huge, business leaders said Thursday, and one of them urged investors to hurry before the Chinese currency rises, possibly in the next nine months.
US Secretary of Commerce Donald Evans also applauded the growing economic strength of the world's most populous nation and noted that Washington's relationship with Beijing was "very good."
With the economy forecast to grow at a rate of at least six percent for the next decade China is the focus for many business investments, executives, including Nissan boss Carlos Ghosn and Ulrich Schumacher, the head of Infineon, told a debate at the World Economic Forum in the Swiss ski resort of Davos.
"Now the time is right, not just because of the exchange rate, to be making investments in China," Schumacher said.
Infineon planned to shift about 30 percent - some 1.2 billion dollars - of its global investment into China in the next three years, he noted.
As for Nissan, Japan's second largest car-maker, China was its most profitable market after the United States, Ghosn said.
"The profit you can make in China is higher than the one you can make in Japan and higher by far higher than the one you can make in Europe," he told delegates on the second day of the five-day forum.
Operating costs in the country remained high, due largely to inefficiencies on the production line, meaning that it was not yet financially viable to export cars made there, Ghosn explained.
But he predicted this would change over the next decade: "In my opinion, five to 10 years down the road China is going to be competitive to producing and exporting cars."
The exchange rate was also an important factor, said Victor Chu, chairman and chief executive of Hong Kong-based First Eastern Investment Group.
"If I had a huge RMB (renminbi) mountain I would be very slow taking it out (of China) because I think that the market for RMB is leading to long-term appreciation," he told the debate entitled: Is China a foreign investment goldmine or minefield?
US, eurozone or Japanese investors should consider exposing themselves more to the Chinese currency, which is fixed at 8.3 to the dollar, according to Chu who predicted the Chinese authorities could reassess the current model by the end of the year.
"We have a window of nine months. In the next nine months we want to really put money into new-producing assets in China," Chu said.
The official line remained that China was committed to moving towards a market oriented mechanism but wanted to ensure the stability of its currency, he said.
At the same time if the authorities decided on a different model, Chu felt they would move very quickly.
Evans, the US commerce secretary, was bullish on China's future despite noting there were problems in the economy - such as a banking system weighed down by bad loans and a lack of clarity on economic data.
"I believe China is heading in the right direction and it is moving in good hands," Evans declared.
"The relationship between our two countries is very, very good," he said, noting that US President George W. Bush has visited the country twice - a first for a US leader.
China faced challenges going forward, but Evans was confident in the country's leaders to get the job done.
"They are focused internally, they are focused on dealing with the counter problems in their country that is going to bring some 800 million people in the west (of China) out of poverty."