China remains attractive to foreign investment thanks to its massive market opportunities, continuous efforts to ease market access for foreign investors and development of a favorable investment environment.
Global foreign direct investment (FDI) fell by 23 percent to $1.43 trillion in 2017, according to the World Investment Report 2018, released by the United Nations Conference on Trade and Development in June. The year saw sluggish global foreign direct investment. On the contrary, China attracted $136 billion in its FDI last year, hitting a new record high.
One of the predominant factors that contribute to China’s attractiveness to foreign investment is its constantly expanding market opportunities, said Sang Baichuan, professor at the University of International Business and Economics.
Sang added that with the rise of per capita income in China and the country’s domestic consumption structure upgrade, Chinese citizens now demand more quality information technology, health care, financial and cultural products, while multinational enterprises have certain advantages in these fields.
For example, British Petroleum (BP), one of the world’s leading integrated oil and gas companies, recently announced its plan to build more than 1,000 gasoline stations in China over the next five years, with the likelihood of also offering charging services for electric vehicles.
BP has bet on China’s market opportunities, evidenced by its willingness to increase investment in the country. According to BP China, it aims to bring a differentiated experience to Chinese consumers by providing quality products and services.
Statistics indicate that China’s high-tech industry maintained rapid growth in utilizing foreign investment, with paid-in investment of 43.37 billion yuan in the first half of 2018, up 25.3 percent from the previous year. The manufacturing industry used 134.83 billion yuan in foreign investment during the same period, accounting for 30.2 percent of the total.
In addition, China unveiled a new negative list in June to ease market restrictions on foreign investors. For example, China has removed restrictions on foreign equity in the banking industry and will lift all restrictions on foreign equity in the financial sector in 2021, according to the list.
China’s resolution in opening up is self-evident, said Zhang Yansheng, a researcher at the China Center for International Economic Exchange, adding that China has rolled out a series of measures to open up in recent years, offering confidence to foreign investors.
After the list was released, the U.S.-based electric vehicle industry leader, Tesla, set up a super factory in Shanghai, marking the city’s biggest ever foreign-funded manufacturing project.
Moreover, China simplified the business registration process for foreign-funded enterprises before the end of June. Enterprises can now complete procedures on the market regulation department’s website. A fairer, more transparent and convenient market environment will enhance foreign enterprises’ confidence in entering the Chinese market.
A report released by the American Chamber of Commerce in China (AmCham China) says that nearly 60 percent of enterprises surveyed list China as one of the three major investment destinations, with one third of enterprises planning to expand their investment in China by more than 10 percent this year.
Despite facing fierce global competition in attracting foreign investment, China, with a huge market potential, continuously growing business environment and rich human resources, has the confidence and ability to become a hot land for foreign investors, noted Gao Feng, a spokesperson for the Chinese Ministry of Commerce.