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Strong FDI data highlight services, high-tech, expansion of opening-up

Foreign direct investment in China has seen double-digit growth in January, and this shows overseas investors have strong confidence in the nation, given its unwavering efforts to expand high-level opening-up, pursue high-quality development and create a better development climate for enterprises, experts said on Wednesday.

China is expected to strengthen implementation of policy measures to attract more FDI, especially in high-tech sectors and pilot free trade zones, they said after digesting data from the Ministry of Commerce’s announcement on Tuesday that China’s actual use of FDI surged 11.6 percent year-on-year to 102.28 billion yuan ($16.12 billion) in January.

The data acquire significance in the context of Chinese authorities’ warning on the triple pressures of demand contraction, supply shocks and weakening expectations amid the nation’s endeavors to stabilize economic growth in an increasingly complicated external environment, experts said.

“Under those challenges and uncertainties, China has stepped up efforts to create a more sustainable and supportive environment for enterprises to grow, including signing and implementing free trade agreements and other measures to expand opening-up, which has firmed up foreign investors’ long-term confidence,” said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.

“The enhancement of regulatory practices in emerging industries aims to help enterprises to foray into new sectors and spur development. It also makes China more attractive to foreign investors.”

Zhang Fei, associate director of the Institute of Foreign Investment of the CAITEC, said China’s accelerated implementation of the dual-circulation development pattern, which takes the domestic market as the mainstay while letting domestic and foreign markets reinforce each other, has been propelling high-quality economic development.

“The new development pattern boosts domestic demand to unleash market potential, and creates more market opportunities for foreign enterprises,” she said, adding the country’s efforts to safeguard industrial and supply chains amid the COVID-19 pandemic will also serve to increase foreign investors’ confidence in China.

In January, FDI in the services sector reached 82.3 billion yuan, up 12 percent year-on-year. Investment inflows to high-tech industries increased 26 percent year-on-year. Within that category, investments in high-tech manufacturing and high-tech services grew by 32 percent and 25 percent, respectively.

Zhang attributed the solid growth in FDI in services and high-tech mainly to China’s expansion of opening-up in related areas.

The continuously shortened negative lists for foreign investment have opened up the services sector and high-tech industries wider to foreign investors, while the revised catalog of industries encouraging foreign investment has also named more sectors in high-tech manufacturing and producer services, she added.

“China has issued all-round policy measures to attract FDI, and effective implementation of those policies will make the country increasingly attractive to foreign investors,” she said.

According to Zheng Lei, chief economist at Glory Sun Financial Group, China is expected to further expand high-level institutional opening-up to better align with high-standard international rules, standards and regulations, to create better regulatory climate and business environment, and therefore better attract FDI and guide more inflows into high-tech industries and high-end services.

Construction of pilot free trade zones should be accelerated, and more trials should be conducted to further unleash FTZs’ potential in attracting FDI, he said.

He also suggested coastal areas and inland port cities should beef up infrastructure investment in both trade and logistics, against the backdrop of the implementation of the Regional Comprehensive Economic Partnership, which took effect on Jan 1.

The RCEP agreement, he said, has amplified interest from the member states of the Association of Southeast Asian Nations to invest in China, while the Belt and Road Initiative also makes major cities in inner regions more attractive to foreign investors.

Investments from economies participating in the BRI and the ASEAN expanded by 28 and 29 percent year-on-year last month, respectively, MOC data showed.

Eastern, central and western regions’ use of FDI increased nearly 9 percent, 46 percent and 42 percent, respectively.
Source: China Daily

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