China remains magnet for foreign direct investment

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Employees make auto parts at a foreign-funded company in Anshan, Liaoning province. Photo/Xinhua

According to data released by China’s Ministry of Commerce on Monday, foreign direct investment (FDI) in the Chinese mainland saw positive growth for the seventh consecutive month in October, with the FDI in actual use expanding 18.3 per cent year-on-year to 81.87 billion yuan ($12.4 billion).

This means that in the first 10 months of the year, FDI growth was 6.4 per cent year-on-year.

In contrast, the World Investment Report 2020 released by the UN Conference on Trade and Development in June estimated global FDI would decrease by 40 per cent this year compared with 2019, with possibly a further five to 10 per cent decrease in the coming year. It is no wonder that China is still a magnet for FDI, as it is still the most attractive destination for foreign investment.

Having generally contained the Covid-19 pandemic, the Chinese economy has recovered quickly, and both the Organisation for Economic Cooperation and Development and the International Monetary Fund predict that China will be the only major economy to record positive growth this year.

Moreover, while its huge market, cheap labour, good transportation and telecommunications infrastructure continue to make the country attractive to FDI, China has also been constantly improving itself. For example, among the total foreign investment used, the high-tech service sector witnessed a growth of 27.8 per cent, which further highlights the efforts and achievements of China’s economic restructuring.

China has also been constantly improving its business environment and opening up further to the world. In 2020 alone, China’s Foreign Investment Law formally came into effect, which further protects the legal rights and interests of global investors; and Hainan Pilot Free Trade Port has been launched, while three more experimental free trade zones have been added.

And on Sunday, the Regional Comprehensive Economic Partnership (RECP) agreement, the world’s largest trade deal, was formally signed by leaders of the 15 participating economies. This will boost FDI flows into and within the region. Investment from ASEAN countries into China had already increased by 13 per cent in the first four months of 2020. Any qualified global investor will be able to see which way the wind is blowing.

China is quite open to FDI in almost all manufacturing and most service industries. And now as it prepares to roll out its 14th Five-Year Plan (2021-25) it is seeking to attract the right kind of FDI to help it rebalance its economy, move up the value chain and achieve its environmental goals. Global investors are always smart enough to find business opportunities, and in China there are plenty.

Editorial/China Daily/Asia News Network