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China remains top destination for FDI

Liu Zhihua
Updated: Jan 14,2022 07:09    China Daily

A safe haven for foreign investors seeking predictable market opportunities at a difficult time amid the COVID-19 pandemic, China will remain a top destination for foreign investment despite various challenges such as rising competition from other emerging markets and a probable pullback of economic stimulus in developed countries, said experts and business leaders.

In order to increase its attractiveness to foreign investors, they said, the nation must expand opening-up and further propel innovation and the application of new technologies.

Their comments came as the Ministry of Commerce said on Jan 13 that foreign direct investment into the Chinese mainland, in actual use, expanded 14.9 percent year-on-year to a record high of 1.15 trillion yuan last year.

In US dollar terms, the inflow went up 20.2 percent year-on-year to $173.48 billion, the ministry said.

Moreover, the annual growth rate of foreign investment in high-tech industries reached 17.1 percent last year, while it grew by 10.7 percent in high-tech manufacturing and 19.2 percent in the high-tech services sector.

Foreign investment in the services sector exceeded 906 billion yuan in 2021, up 16.7 percent year-on-year.

"With effective control of COVID-19, China's stable industrial and supply chains and its expanding domestic market will consolidate foreign investors' confidence," said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.

"Its rapid pace of urbanization, industrial upgrading and domestic market expansion amid the pursuit of high-level opening-up will continue to create more market opportunities for foreign investors," Zhou added.

Allan Gabor, president of Merck China and managing director of Merck Electronics China, said foreign businesses, including his company, have profited greatly from China's growth, and all three of Merck's business sectors-electronics, healthcare and life sciences-will continue to invest in China.

China is already the strongest growth driver and the second-largest sales market globally for Merck, he said, adding that the company has a strong focus on cooperation with Chinese partners and local innovation in all of its businesses.

Huo Jianguo, vice-chairman of the China Society for World Trade Organization Studies, said the Central Economic Work Conference in December, which outlined key economic policy priorities for 2022, again showed China's determination to expand high-level opening-up and establish a unified, transparent and law-abiding domestic market which meets international standards.

As more measures to better protect the legitimate rights and interests of foreign investors under the framework of laws and regulations are expected, China will become even more competitive in terms of attracting foreign investment, he said.

However, outside factors are increasingly affecting the growth momentum of foreign investment inflows to China, and the nation needs to ramp up efforts to cope with the situation, analysts said.

As the pandemic evolves, foreign investors are likely to have more options if economic recovery occurs in more countries and the layout of global industrial and supply chains is adjusted, according to Zhou from the Chinese Academy of International Trade and Economic Cooperation.

As investors go where they can generate profits, Zhou said that China is expected to continue to create stable and favorable conditions for the application of new technologies and products, including a supportive regulatory and financing environment.

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