China should roll out more robust measures to better attract and utilize foreign investment, further optimize its business environment, reduce its negative list and remove discriminatory practices, according to legislators and political advisers attending the NPC and CPPCC sessions. They stressed that China’s vast and expanding market, coupled with its increasing openness to foreign investment, would present new opportunities for many businesses across sectors, and its well-developed industrial and supply chains could provide a solid production foundation, further enhancing its appeal to foreign investors. “The current global economy is grappling with various uncertainties, particularly the rise of trade and investment protectionism and unilateralism, which have severely disrupted the global decision-making of multinational corporations,” said NPC Deputy Tian Xuan. China should introduce a package of well-targeted policies to mitigate the negative impacts of instability, so as to offer a more welcoming climate and catalyze foreign investment amid a rapidly changing world, said Tian, who is also Associate Dean of Tsinghua University’s People’s Bank of China School of Finance.
The country saw a significant increase in the number of newly established foreign-invested enterprises last year, with 53,766 companies being set up nationwide, representing a year-on-year growth of 39.7%. With a growth rate of 5.2% in 2023, China not only outperformed the global estimate of approximately 3% growth, but it also took the lead among the world’s leading economies. According to the International Monetary Fund (IMF), China contributed more than 30% to global economic growth last year, solidifying its role as a main force behind the global economy. Going forward, the country’s all-out efforts to sustain stable economic growth are essential to draw international investors, contributing to the overall attractiveness of China as an investment destination, said Pan Yuanyuan, Associate Researcher at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics.
It’s of great significance to not only attract foreign investment but also retain it, so optimizing the business environment and providing more streamlined and convenient services to businesses are crucial steps, said Quan Heng, Deputy to the 14th NPC and Economist at the Shanghai Academy of Social Sciences. According to a poll by the China Council for the Promotion of International Trade (CCPIT) in late January, more than 90% of foreign businesses consider the Chinese market to be attractive, and over 80% expressed satisfaction with China’s business environment in 2023. The survey conducted by the country’s top foreign trade and investment promotion agency also showed that nearly 70% of polled enterprises are upbeat about the prospects of the Chinese market over the next five years.
That said, improving the facilitation of foreign investment and enhancing the enabling environment for innovation will remain high on the Chinese government’s work agenda, said Jiang Ying, Chair of Deloitte China and also a Member of the 14th National Committee of the Chinese People’s Political Consultative Conference. By simplifying administrative procedures and promoting collaboration and knowledge exchange between foreign and domestic entities, China will foster a conducive ecosystem for foreign businesses to establish research and development centers in the country, and contribute to its innovation landscape, Jiang added. Expanding market access for global investors needs to be promoted on an ongoing basis, with efforts focussed on reducing the negative list for foreign investment and enhancing the openness of modern service industries such as education, healthcare and elderly care, Jiang added.
In late October, China took a significant step to help attract foreign investment by announcing the complete removal of restrictions on foreign investment in the manufacturing sector. Despite the diversification of multinational companies’ global expansion strategies, China continues to be a crucial choice for top-tier enterprises thanks to its infrastructure development, technological advancements and industrial capabilities, as well as its super-sized market.
Looking ahead, China is expected to further consolidate and enhance its attractiveness for foreign investment, with particular emphasis on sectors such as the digital economy, green economy and high-tech industries. Stronger policy support should be provided and restrictions removed as appropriate, to guide more foreign investment toward such sectors as digital economy, green economy, high-tech, and medium- and high-end manufacturing, as well as the central, western and northeastern regions of the country. Last year, high-tech industries accounted for 37.4% of total foreign direct investment (FDI), increasing by 1.3 percentage points compared with 2022 and posting a record high. Additionally, the manufacturing sector saw an increase in its proportion of FDI by 1.6 percentage points to 27.9%, the China Daily reports.
