China to encourage more foreign investment in advanced manufacturing and services; high-tech and the digital economy

China will expand the number of items in the industry catalog that encourages foreign investment, and further beef up preferential land and tax policies, to guide the flow of more foreign capital into fields such as advanced manufacturing, modern services, high technology and the digital economy, as well as to China's central and western regions, officials said. Chen Chunjiang, Director of the Foreign Investment Administration (FIA) under the Ministry of Commerce (MOFCOM), said the Ministry will stabilize growth of foreign direct investment (FDI) while improving the structure of FDI inflows in 2022, despite the increased complexity of external and domestic conditions. Those uncertainties and challenges include intensified global competition to attract FDI, the Covid-19 pandemic’s disruption of cross-border investment, and increased costs of labor, land and raw materials in China, he said.

China’s actual use of FDI rose 14.9% year-on-year to hit a record CNY1.1 trillion last year. Newly established foreign-funded enterprises in 2021 numbered 48,000, surging 23.5% year-on-year. “We will implement the 2021 national negative list for foreign investment and the one for pilot free trade zones (FTZs), and make sure opening-up measures in automobile manufacturing will be carried out and take effect to help attract more investment from multinational companies,” Chen said. The Ministry will also reinforce efforts to meet key foreign investment projects’ need for land, energy, environmental protection and cross-border personnel flow, to ensure the projects will be signed and completed and then operate at full production capacity as soon as possible, he added.

Wang Tuo, Researcher at the Chinese Academy of International Trade and Economic Cooperation, said the implementation of the Regional Comprehensive Economic Partnership (RCEP) agreement, which was signed in 2020 and took effect on January 1, will facilitate the growth of China’s foreign trade and FDI inflows. Li Xingqian, Director of MOFCOM's Department of Foreign Trade, said that stability and steady growth will be the priority for China’s foreign trade in 2022, and the nation will pay more attention to the improvement of trade quality, compared with expansion of trade quantity, the China Daily reports.