New foreign investments announced days after Shanghai lockdown ends

From recruiting more employees to setting up new enterprises, many foreign companies could not wait to announce plans for increasing investment in Shanghai just days after the Omicron-battered city lifted a two-month lockdown, as overseas investors continue to show their confidence in and commitment to the Chinese market in spite of external challenges, the Global Times reports. Their move to expand, not cut, investment in China is a vivid testimony of the unswerving appeal of the market to overseas investors, as they see its long-term potential, as well as the advantages of setting up factories in China as being much more important than the “one-time short period shock” of the coronavirus impact, experts said. They also predicted that China's foreign investment inflow will remain positive now that cities like Shanghai and Beijing have basically eliminated Covid-19 infections, and as China rolls out a basket of policies to stimulate economic growth and attract foreign investment.

In the first week after Shanghai announced it was lifting the two-month lockdown, a number of overseas companies announced they will expand investment in Shanghai, in stark contrast to what some overseas media claimed were foreign investors “fleeing” China as a result of strict domestic Covid management measures. Some companies are rushing to roll out recruitment plans in China to replenish talent reserves for their local business. For example, global semiconductor firm ASML is expanding its team in China this year, with a target of hiring more than 200 employees. “The impact of the pandemic is temporary, and the importance of the China market and the ongoing positive trend of China's economy remained as before,” the company said in a statement, adding in particular that the recent closed-loop operations, resulting in their employees working and living in factories, is an “unforgettable experience” that would deepen their partnership. Likewise, Tesla rolled out a hiring campaign in late-May, providing dozens of positions for their Shanghai-based research & development innovation center.

Some companies are eyeing expanded investment by opening more stores in China. Starbucks, for example, opened a new shop in Shanghai's Qingpu district, while the company is also planning to open new stores in mainland cities including Shanghai in the future, CEO of Starbucks China Cai Delin told the Global Times. “We will continue to increase investment in China, and use concrete action to show our confidence and commitment to the Chinese market,” Cai said.

Those companies' moves to expand or prepare for further investment in China are examples of a continued trend recently for overseas investors to ramp up investment in China despite external economic challenges. According to a report by the China Council for the Promotion of International Trade (CCPIT) in late May, around 90% of the foreign enterprises surveyed maintained or expanded their business scale in China in the first quarter, while about half of the companies regard China as the world's top investment target. Many companies have set up new branches in China in recent months. French cosmetics firm L'Oreal, for example, set up its first investment subsidiary in Shanghai in May, representing the company's “extremely solid” pledge for the Chinese market.

Foreign direct investment into the Chinese mainland, in actual use, went up 26.1% year-on-year to USD74.47 billion in the first four months of this year, according to the Ministry of Commerce (MOFCOM). Major foreign-funded projects also registered steady expansion in the first four months with government efforts to overcome the impact of the pandemic and actively attract investment. In the January-April period, China saw 185 newly-added major projects, each with foreign investment of over USD100 million, which means 1.5 major foreign-funded projects were launched on average each day, according to MOFCOM.

Experts also predicted that China's inflow of foreign investment will keep up the momentum in the second half of this year because of the advantages of China's anti-epidemic measures, its pledge to stabilize and attract foreign investment, and the implementation of 33 stimulus measures. According to Cao Heping, an economist from Peking University, this round of economic stimulus should release capital amounting to about CNY12 trillion, which will drive investment of over CNY20 trillion and consumption of over CNY30 trillion. In general, Cao predicted that China's economy could grow by about 5% this year, the Global Times reports.