China's High-level Opening Up Bears Fruit: Improved Investment Environment Attracts Global Business Magnates

2023-June-30 15:08 By: GMW.cn

Co-chair of the Bill & Melinda Gates Foundation Bill Gates visited China on Jun. 14, and met with President Xi Jinping, who acknowledged the US entrepreneur as “an old friend” of Chinese people. Though he’s no longer Microsoft CEO and board director, Bill Gates is still one of the most influential US business magnets.

Since the beginning of 2023, over 40 foreign senior executives major multinational companies have made business trips to China. The former richest man in the world, former CEO of Microsoft, and philanthropist Bill Gates is just another example following such big names as Apple's Tim Cook, Tesla’s Elon Musk, Kering’s François-Henri Pinault, Siemens’ Roland Busch, Samsung’s Lee Jae-yong Blackstone's Stephen Schwarzman, and JP Morgan's Jamie Dimon.

The trend is a signal that China remains the most popular place for foreign investment, and the world is optimistic about China's economic prospect.

Foreign investment remains high performance with economy overall resumption

China’s first-quarter GDP grew 4.5% year on year, reaching 28,499.7 billion yuan ($4,145.5 billion). Meanwhile, from January to March, China's foreign direct investment (FDI) net inflows reached 408.45 billion yuan (about $59.2 billion), with a year-on-year increase of 4.9%, according to the Ministry of Commerce.

Since the beginning of reform and opening-up, the Chinese government has continuously optimized the business environment for foreign-funded enterprises and promoted high-level opening-up, which has greatly consolidated foreign investor confidence in both the Chinese market and policy environment.

China's sound infrastructure and complete, stable industrial and supply chains demonstrate conspicuous competitive advantages on the production side. What's more, China has a large population, the largest middle-income population in the world, and a huge potential domestic consumer market, which all prove to be appealing to foreign investment.

In terms of policy, China continues to optimize the business environment, reduce restrictions on foreign investment access, and improve services for foreign-invested enterprises in the past 20 years, adhering to a high level of opening up.

In 2022, China's actual use of foreign investment reached $189.13 billion, an increase of 8% year-on-year, maintaining steady growth for 20 consecutive years.

Optimzied structure of FDI empowers high-quality opening up

The structure of FDI has been continuously improved. In 2022, the actual use of FDI in high-tech industries increased by 28.3% year-on-year, accounting for 36.1% of the country's total, with an increase of 7.1 percentage points over 2021, according to the Ministry of Commerce.

When we look at historical data, the share of actual use of FDI in sectors of scientific research, technical service, and geologic prospecting increased nearly 5 times, from 2.77% in 2012 to 13.12% in 2021, and the share of information transmission, computer services, and software has also quadrupled from 3.01% to 11.59%.

Major sources of overseas investment generally increased. In 2022, Hong Kong remained the largest source of inflow investment to China’s mainland, and the largest growth in direct investment came from South Korea, Germany, and the United Kingdom, with year-on-year growth of 63.1%, 52.7%, and 33.2% respectively.

Investment in the central and western regions increased steadily. In 2022, the actual use of FDI in China's central and western regions increased by 21.9% and 14.1% year-on-year, respectively, 15.6 and 7.8 percentage points higher than the national average. Overseas investments in Shanxi, Henan, Guangxi, and Shaanxi provinces grew 229.6%, 119.8%, 49.1% and 33.6%, respectively.

Carl Fey, a professor of BI Norwegian Business School, analyzed the trend of entrepreneurs’ visits to China, and found that the removal of travel restrictions, a rapid growing economy, and an increasingly highly-educated, hard-working, and reliable workforce are fundamental contributors to this phenomenon.

Professor Fey also pointed out that, China has optimized business environment by improving laws and regulations to protect the rights and interests of foreign-funded enterprises. “China has progressed significantly in recent years to solve problems concerning foreign investors previously, like legislation on intellectual property and its focus on environmental issues,” Fey said. “It is important for foreign companies to stay up to date and evaluate the current situation in China and not be stuck on old perceptions of China which are no longer true.”

Statistics fromNational Bureau of Statistics of China

Editor: ZAD

China's High-level Opening Up Bears Fruit: Improved Investment Environment Attracts Global Business Magnates

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