In 2016, China’s actual foreign investment hit 813.22 billion yuan, up 4.1% year on year. Against the backdrop of worldwide dramatic decline of FDI in 2016 expected by UNCTAD (United Nations Conference on Trade and Development), China’s such achievement indicates that foreign businessmen still have great confidence in investing in China and the development potential of Chinese market.

After the disclosure of the 2016 foreign trade score, China’s 2016 foreign investment attraction score was also unveiled recently. According to data released by the Ministry of Commerce, in 2016, China’s actual foreign investment hit 813.22 billion yuan(excl. investment in banks, securities and insurance companies), up 4.1% year on year. Even measured in USD, the growth rate is much higher than the average of global investment growth, proving the so-called “escape of foreign investment” just a groundless rumor again.

Thanks to China’s traditional advantages in attracting foreign investment and the continuous dividends of reform and opening-up, China had been stable in attracting foreign investment and had a better performance than the world in 2016, said the expert at the interview. In 2017, China should pay more attention to the relationship between short-term and long-term objectives of foreign investment attraction, carry out investment promotion with clear emphases, stages and plans, and strive to improve the ability for attracting foreign investment.

Defeating the “escape of foreign investment” rumor

“In 2016, China had been stable in attracting foreign investment,” said the person in charge of foreign investment department of Ministry of Commerce when talking about China’s foreign investment attraction in 2016 recently.

According to statistics, in 2016, a total of 27,900 new foreign-funded enterprises were established nationwide, up 5% year on year, and China’s actual foreign investment hit 813.22 billion yuan, up 4.1% year on year.

If measured in USD, China actual foreign investment reduction is less than 1%, said the expert at the interview. According to data issued by UNCTAD, the global FDI in 2016 will decrease 10-15%. China’s foreign investment attraction growth rate is much higher than the average growth of global FDI.

Statistics indicate that China had been stable in attracting foreign investment, said Hao Hongmei, deputy director of Foreign Investment Institute of Ministry of Commerce Research Academy. It mainly benefited from the traditional investment promotion advantages including improved industrial chain, sufficient labor force and complete infrastructures, the increasing reform of FTZ, the further improvement of opening-up and the start of supply-side reform for foreign funds.

In 2016, China’s foreign investment attraction had six characteristics, said the person in charge of foreign investment department of Ministry of Commerce. First, China had been stable in attracting foreign investment; second, foreign investment continued to concentrate on high-end industries; third, system reform’s dividends continuously emerge; fourth, the structure of foreign investment attraction in western and eastern regions tended to be more reasonable; fifth, source of major investment diversified; and sixth, there were more newly-established and investment-expanded enterprises.

Against the backdrop of the restructuring of global value chain, it is normal for multinationals to make investment distribution adjustment, said analysts. Statistics indicate that China keeps stable in foreign investment growth and progressive in foreign investment quality, which not only proves the so-called “escape of foreign investment” just a groundless rumor again, but also makes the  “escape of foreign investment” an momentum for China to improve the business environment and accelerate the cultivation of China’s new charm in investment promotion.

Starting from improving living environment

“The biggest enemy of China’s foreign investment attraction is neither the ‘escape of foreign investment’ nor the business environment, but the smog”, said Hao Hongmei frankly. Comprehensive factors are considered for enterprises’ investment, and living environment is one of the basic elements. According to a survey to multinationals, 75% of interviewees gave high praise to China’s infrastructures, and said the living environment was comparatively worse and required further improvement. “In terms of investment promotion, we should be based on current situation and aim at long-term development.” As for the investment promotion in 2017, Hao Hongmei suggested from five aspects. First, keeping strategic stability to avoid inconsistent investment promotion, and focusing on optimizing foreign investment structure and improving foreign investment utilization level; second, reaching China-US bilateral investment agreement as soon as possible to boost investment facilitation when investment protectionism rises; third, driving the formation of different, more efficient investment promotion policies to formulate customized policies for different provinces and industries and carry out investment promotion with clear focuses, steps and plans; fourth, regarding manufacturing as the core of state competitiveness. In 2016, the foreign investment application of China’s service industry accounted for 70.3% of the total. So, we need to attach special importance to the foreign investment application of China’s manufacturing industry. Fifth, forging “system highland” through reform and opening-up expansion, and applying the measures of further reduction of taxes and fees to improve enterprises’ profitability.

China’s system reform dividends continuously emerge with more and more growth points for attracting foreign investment, said relevant director of Ministry of Commerce. For example, the four listed FTZs, only five 100 thousands of the national territorial area, accounted for 10.8% of the actual foreign investment of the country in 2016, with a year-on-year growth of 81.3%. After changing the approval system to registration system for foreign-funded enterprises, 95.3% of the establishment and alteration issues of foreign-funded enterprises were completed through registration. After expanding the service industry’s comprehensive pilot opening-up, the actual foreign funds application of Beijing’s service industry accounted for 13% of the national total of the service industry.

 

Source: Translated from Invest Guangzhou, Jan. 17, 2017