China's enduring allure: A magnet for foreign investment

Editor's note: As China is busy preparing for the annual two sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), some Western media have been enthusiastically hyping that the Chinese economy is collapsing. Is the Chinese economy going to fail? What opportunities have China's growth brought to the world? China's Economy from a Global Perspective is a 10-part series analyzing the above questions. The seventh essay explores foreign investments in China. He Weiwen is a senior fellow at the Center for China and Globalization. The article reflects the author's opinions and not necessarily the views of CGTN.

In the past year, some Western media outlets have been running reports about "foreign capital leaving China" and China's "ongoing crackdown on foreign businesses" under a so-called counter-espionage campaign, which is a malicious attack and a smear on the Chinese economy in fact.

It should be recognized that the fall of foreign direct investment (FDI) inflows to China is temporary. First, the China-U.S. tensions can't be ignored. Washington's policy of "small yard, high fence" and resilient supply chain based on value and like-minded political allies created significant obstacles.

Though the inadequate market demand and overcapacity in selected industries in global economy caused some uncertainty among investors, China still remained a major destination for world investors, with its FDI volume in 2023 hit more than 1.13 trillion yuan ($163.2 billion), which remained the third highest in history.

Micron, the U.S. leading semiconductor giant, decided to add 4.3 billion yuan ($603 million) in China despite the Chinese government ban on its sales in the country. Apple CEO Tim Cook said that Apple remains committed to China, and cherishes the things that have been achieved during the company's 30-year relationship with the country.

China Academy of Information and Communications Technology has estimated that China's digital market will hit $8.3 trillion by 2025, a great opportunity that foreign investors cannot spare. A study released recently by German Institute of Economy showed that German direct investment in China hit a new high in 2023, at 11.9 billion euros ($12.7 billion), and accounted for 10.3 percent of German total outbound investment, the highest since 2014.

Foreign investors' positive outlook on the Chinese market stems from its vast size, robust innovation vitality, and China's ongoing efforts to enhance the business environment. The Chinese government's efforts to improve the market situation for foreign investors have been intensified. China launched 24 points for stabilizing import and export trade, and approved trial of institutional reform in the free trade zones of Shanghai, Guangdong, Tianjin, Fujian, Beijing and Hainan Free Trade Port in accordance to the high-standard international trade rules.

Against the backdrop of rising geopolitical segmentation and geo-economic fragmentation, the adherence to high-level opening-up is vital for both China and the world. An IMF report has estimated that if world splintered into two camps led by the U.S. and China respectively, with some countries including India and Indonesia non-aligned, we could see global output fall by 1 percent in five years and 2 percent long term. A fragmented world is likely to be a poorer one.

In this context, China has been dedicated to absorbing the world's best knowledge, technology, talents, and must integrate into the complete global production chain and global supply chain. Deepening reform and high-level opening-up is the only effective way to break the "small yard, high fence" order.

Looking ahead for 2024, the two sessions will signal a new starting point in high-level opening-up, focusing on institutional opening-up, in accordance to the high-level international trade rules, further supporting import and export and striving for a rebound in foreign direct investment in China.

The country will move forward in applying for CPTPP membership, and energetically improve its investment environment, providing fair, transparent, legal-based playground for all businesses, be them centrally administered state-owned enterprises, private or foreign.

Western predictions of an impending crash in the Chinese economy will ultimately be proven incorrect. 2024 will be a year of hope, a year of new advance in China's long march opening to the world, and developing together with the world.

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