China to stabilize foreign capital and expand opening up
People's Daily Online
(People's Daily Online) 17:05, August 14, 2018
Since the beginning of this year, the utilization of foreign capital in China has continued to grow at a steady pace and with increasing quality, even though the global competition for attracting foreign investment has become progressively more intense.
This July, many foreign enterprises announced new plans for investment in China.
The BASF Group, the world's largest chemical producer, has released plans to build a petrochemical company with a total investment of over $10 billion in southern China's Guangdong province. Tesla will build a "super factory" which is expected to produce 500,000 all-electric vehicles annually in Shanghai. BMW plans to increase the capacity of its joint venture plants in China by around 16 percent.
In addition, the proposal for stabilizing foreign investment, made during a meeting held by the Political Bureau of the Communist Party of China (CPC) Central Committee on July 31, further enhanced the confidence of foreign enterprises to invest in China.
China sees remarkable mid-year results in the utilization of foreign capital
"Statistics from the first half of 2018 indicate a steady overall rate and a slight increase in our actual utilization of foreign capital," said Huo Jianguo, vice chairman of the China Society for WTO studies, adding that China has scored well in attracting foreign investment during the first half of this year.
Although many countries have introduced policies to attract foreign investment, the overall situation in terms of the global direct investment market is not so rosy.
Last year, global foreign direct investment totaled $1.43 trillion, down 23 percent year-on-year, according to the World Investment Report 2018, released by the United Nations Conference on Trade and Development (UNCTAD).
"Under this context, China's steady use of foreign capital is particularly eye-catching," said Sang Baichuan, a professor at the University of International Business and Economics.
Statistics from China's Ministry of Commerce indicate that the actual use of foreign capital in China during the first half of 2018 was $68.32 billion, up 4.1 percent since the previous year. In particular, during the first two quarters of this year, there were 29,591 newly established foreign-funded enterprises throughout the country, an increase of 96.6 percent compared with the same period last year.
In the first half of this year, China's main sources of foreign investment have injected more money into China. Actual investment in China from the U.S., Singapore, South Korea and the U.K. increased by 29.1 percent, 19.7 percent, 43.8 percent, and 82.5 percent respectively.
Moreover, foreign investment in China from ASEAN countries and those along the Belt and Road rose by 24.4 percent and 24.9 percent respectively when compared with the same period last year.
China's capacity to attract foreign investment has markedly improved. In the first half of the year, the actual use of foreign capital in China's manufacturing industry was 134.83 billion yuan, up by 4.9 percent year-on-year and accounting for 30.2 percent of the total use of foreign capital in China.
The actual use of foreign investment in China's high-tech industry during the first half of the year was 43.37 billion yuan, an increase of 25.3 percent year-on-year. In particular, the actual use of foreign capital in electronics and communication equipment manufacturing, office equipment manufacturing and medical equipment manufacturing increased by 36 percent, 31.7 percent and 154.4 percent respectively.
China's high-tech services saw an actual use of foreign capital totaling 50.03 billion yuan, of which the use of foreign capital by services concerning the commercialization of science and technological achievements increased by 22.2 percent from the previous year.
With the further enhancement of China's opening up policy, foreign investment is flowing into China at a speedier pace.
Shanghai, for example, established 17 more regional headquarters of multinational enterprises and eight more foreign-invested R&D centers in the city during the first half of the year.
Owing to the great momentum of its economy, Shanghai is now home to 642 regional headquarters of multinational corporations and 434 foreign-funded R&D centers.
"Foreign capital has been injected into a broader range of field through more diversified channels in China. It is evident that in the eyes of foreign investors, China is still an attractive hot-spot for investment," Sang said.
China shows new charm in attracting investment
Sang believes that transnational investment is facing multiple challenges, though there are indications that it could get easier, such as geopolitics, as well as the unilateralism and protectionism of some countries. He said that attracting investment on the global market will be a fiercer competition. "This has aggravated the complexity and uncertainties of stabilizing foreign investment in the second half of this year," he added.
"Thanks to a series of opening measures that have established new charm in attracting foreign investment, China will perform well in stabilizing foreign capital," said Bai Ming, deputy director of the Ministry of Commerce of the International Market Research Institute.
Larger opportunities on the market
British Petroleum announced plans at the end of July to invest $10 million in its Chinese partners who will build an ecosystem for new energy vehicles (NEV), including NEV-related technologies, new energy infrastructure, and smart vehicle systems. The company has seen the great potential of China's green transportation and is willing to participate in it.
China still has huge potential in domestic demand. The Chinese market is not only expanding its size, but also upgrading its structure. With increasing per capita income, "new consumption" is driving demand. The Chinese will need more quality information, medical, health, financial and cultural services. Transnational companies have established their advantages in these areas and enjoy broad prospects.
A broader range of investment
The ICBC Ansheng Life Insurance-initiated ICBC Ansheng Asset Management Co., Ltd was approved by the China Insurance Regulatory Commission in May 2018. It was the first joint-venture approved in China after the country proposed to expand the opening up of the financial sector.
The international foreign exchange service provider, WorldFirst, submitted an application to China's central bank to enter the country's booming third-party payment industry. It indicated that China has opened up its third-party payment industry to foreign capital.
As China pushes forward with opening up, foreign capital will enter more areas across China. Zhang Yansheng, a chief research fellow with the China Center for International Economic Exchanges, said China will fulfill its commitment by opening up further to the world. The country has taken a slew of measures to open up areas such as its consumer market, manufacturing industry, and service industry, making foreign companies feel more assured investing in China.
A better business environment
In June, China began allowing business filing and business registration to be processed at the same time. Foreign enterprises can now finish the two procedures online at the same time with no charge. China sees more than 30,000 newly-established foreign firms every year; simplifying the procedures for setting up foreign-invested businesses is vital to attracting more foreign investment in the future.
From issuing favorable policies to improving its business environment, China has protected the legitimate rights of foreign enterprises in China through docking its economic and trade rules to that of the world, while also increasing market transparency. These measures will offer more benefits to foreign enterprises and make them operate more efficiently with stronger momentum.
China expands opening up through stabilizing foreign investment
Earlier this month, Pepsi announced an extra $100 million in investment in China and the planned expansion of its factory in Shanghai. "China is one of the largest markets for our development. We are optimistic about the Chinese market and we choose to increase investment here based on analysis of the Chinese economy and market demand," said the person in charge of Pepsi's Greater China Region.
China's economic development over the past 40 years was achieved by opening up, and to achieve high-quality development the country has to open up wider to the world, said Bai Ming. Foreign capital plays an active and important role in promoting economic growth and deepening reform, and it will inject more impetus into China's economic structural upgrading, coordinated development and technological innovation.
China has proposed policies to relax market access, create a more attractive environment for investment and strengthen intellectual protection. Implementing these policies as early as possible will guarantee that more investment will flow in China and create a new pattern closely linked with reform.
The Chinese measures to expand opening up has provided business opportunities for foreign companies and helped them gain profits. China's strong composure for expanding opening up has boosted the willingness and confidence of foreign companies to enter the Chinese market.
According to the 2018 Business Climate Survey Report, released by the American Chamber of Commerce in China, more than 60 percent of surveyed American enterprises put China on their top three investment destinations and one-third of them expressed their plans to increase investment in China by more than 10 percent.
According to the latest business confidence survey issued by the European Chamber of Commerce, more than half of European companies are planning to expand their businesses in China. A report by the Japan Bank for International Cooperation indicated that China was voted as the most promising place for business development by multinational corporations in the manufacturing industry of Japan.
Zhan Xiaoning, an official in charge of investment and enterprises under the United Nations Conference on Trade and Development, said China has unveiled a list of measures to promote trade facilitation. In the future, the size of foreign direct investment in China will remain large. "China is relaxing market access, optimizing its business environment and improving service levels," said Sang.
China holds large market potential, said spokesperson Gao Feng of the Chinese Ministry of Commerce. The country's improving business climate and growing industrial capacity are also globally competitive, Gao said, adding that China is confident it can achieve high-quality development in the utilization of foreign investment and remain a hotbed for foreign investment.
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