Foreign direct investment (FDI) in actual use surged by around 16% year-on-year to more than CNY1.04 trillion during the first 11 months of this year. In U.S. dollar terms, FDI exceeded USD157 billion, up 21.4% year-on-year, according to China's Ministry of Commerce (MOFCOM). As the Chinese economy faces downward pressure from demand contraction, supply shocks and weakening expectations, the annual Central Economic Work Conference emphasized expanding high-level opening-up and strengthening efforts to attract more FDI. Zhang Yansheng, Chief Researcher at the China Center for International Economic Exchanges, said it is necessary to further demonstrate to foreign investors China’s firm stance on deepening reform and expanding opening-up. That will stabilize their expectations to secure growth in foreign investment, which will help beef up China’s economic growth, he said.
Huo Jianguo, Vice Chairman of the China Society for World Trade Organization Studies, noted that the Chinese government has always attached great importance to facilitating FDI growth, as FDI plays an important role in the healthy operation of the Chinese economy. The nation has adopted various measures over the years to boost the use of foreign capital. Such measures include reducing taxes, shortening the negative list for foreign investment, and lifting foreign ownership caps in sectors like securities, futures and life insurance.
China has also become a major destination for FDI because the country has a huge market, strong economic resilience and continuous opening-up, which should help share its development dividends with the rest of the world. In 2020, FDI in China rose by 6% to USD149 billion, contrasting a 35% plunge in global investments due to Covid-19. “The enhancement of a market mechanism-based and law-abiding domestic market that is up to high-level international standards, should be the focus in the next phase to boost foreign investors’ confidence in China and attract more foreign investment,” Huo said. The Commerce Ministry said the nation will continue to reduce items on the negative list for foreign investment, strengthen services and protection for foreign-funded enterprises and projects, and foster a constantly improving business environment. Huo suggested the nation should take more measures to further open up its services sector to foreign investors as the sector’s growth remains essential for worldwide economic growth. Ministry data showed actual use of FDI in China’s services sector surged 17% year-on-year during the January-November period to CNY824 billion, or about 80% of total FDI inflows. FDI in the high-tech industry grew about 19% year-on-year during the same period. FDI in high-tech services rose by about 21% year-on-year and that in high-tech manufacturing by 14%, the China Daily reports.
Strong fundamentals in China’s consumption sector are likely to extend into 2022, with sales of fast-moving consumer goods (FMCG) expected to stabilize at a 3% to 4% growth next year. FMCG volume gained 3.3% and its value rose 3.6% in the first nine months for a modest recovery amid the Covid-19 pandemic, even if average selling prices, which remained depressed, have gained only 0.3%, said the China Shopper Report by Bain & Co and Kantar Worldpanel. The report is now in its 10th year of publication. For the first three quarters, personal care categories reported a 3.8% volume growth and 2.1% gain in average selling prices. This in turn led to 5.9% value growth, which was a substantial improvement from the 1.1% value growth for the same period last year.
