China to stabilize foreign capital and expand opening up

Since the beginning of this year, the utilization of foreign capital in China has continued to grow at a steady pace and with increasing quality, even though the global competition for attracting foreign investment has become progressively more intense.

This July, many foreign enterprises announced new plans for investment in China.

The BASF Group, the world’s largest chemical producer, has released plans to build a petrochemical company with a total investment of over $10 billion in southern China’s Guangdong province. Tesla will build a “super factory” which is expected to produce 500,000 all-electric vehicles annually in Shanghai. BMW plans to increase the capacity of its joint venture plants in China by around 16 percent.

In addition, the proposal for stabilizing foreign investment, made during a meeting held by the Political Bureau of the Communist Party of China (CPC) Central Committee on July 31, further enhanced the confidence of foreign enterprises to invest in China.

China sees remarkable mid-year results in the utilization of foreign capital

"Statistics from the first half of 2018 indicate a steady overall rate and a slight increase in our actual utilization of foreign capital," said Huo Jianguo, vice chairman of the China Society for WTO studies, adding that China has scored well in attracting foreign investment during the first half of this year.

Although many countries have introduced policies to attract foreign investment, the overall situation in terms of the global direct investment market is not so rosy.

Last year, global foreign direct investment totaled $1.43 trillion, down 23 percent year-on-year, according to the World Investment Report 2018, released by the United Nations Conference on Trade and Development (UNCTAD).

"Under this context, China's steady use of foreign capital is particularly eye-catching," said Sang Baichuan, a professor at the University of International Business and Economics.

Statistics from China’s Ministry of Commerce indicate that the actual use of foreign capital in China during the first half of 2018 was $68.32 billion, up 4.1 percent since the previous year. In particular, during the first two quarters of this year, there were 29,591 newly established foreign-funded enterprises throughout the country, an increase of 96.6 percent compared with the same period last year.

In the first half of this year, China’s main sources of foreign investment have injected more money into China. Actual investment in China from the U.S., Singapore, South Korea and the U.K. increased by 29.1 percent, 19.7 percent, 43.8 percent, and 82.5 percent respectively.

Moreover, foreign investment in China from ASEAN countries and those along the Belt and Road rose by 24.4 percent and 24.9 percent respectively when compared with the same period last year.

China’s capacity to attract foreign investment has markedly improved. In the first half of the year, the actual use of foreign capital in China’s manufacturing industry was 134.83 billion yuan, up by 4.9 percent year-on-year and accounting for 30.2 percent of the total use of foreign capital in China.

The actual use of foreign investment in China’s high-tech industry during the first half of the year was 43.37 billion yuan, an increase of 25.3 percent year-on-year. In particular, the actual use of foreign capital in electronics and communication equipment manufacturing, office equipment manufacturing and medical equipment manufacturing increased by 36 percent, 31.7 percent and 154.4 percent respectively.

China’s high-tech services saw an actual use of foreign capital totaling 50.03 billion yuan, of which the use of foreign capital by services concerning the commercialization of science and technological achievements increased by 22.2 percent from the previous year.

With the further enhancement of China’s opening up policy, foreign investment is flowing into China at a speedier pace.

Shanghai, for example, established 17 more regional headquarters of multinational enterprises and eight more foreign-invested R&D centers in the city during the first half of the year.

Owing to the great momentum of its economy, Shanghai is now home to 642 regional headquarters of multinational corporations and 434 foreign-funded R&D centers.

"Foreign capital has been injected into a broader range of field through more diversified channels in China. It is evident that in the eyes of foreign investors, China is still an attractive hot-spot for investment," Sang said.