FDI in China grows 17.4% in H1 against ‘capital outflow’ rumors
China remains an attractive destination for global investment, as latest data showed major economies including South Korea, the US and Germany continued to ramp up commitments to the Chinese market in the first half of this year, effectively disproving claims of capital outflow from China to other countries.
Although supply chains were disturbed in the first half of this year by the epidemic, China remained a growth engine for global multinationals, and the Chinese government has vowed to make China a place where foreign enterprises “dare to invest.”
By source, South Korea ranked first, with growth of 37.2 percent, followed by the US with 26.1 percent and Germany with 13.9 percent.
“The data points to still-buoyant foreign investor sentiment in the Chinese market regardless of global gloom at large. This slammed earlier reports that multinationals hailing from the US and European countries are fleeing the Chinese market and shifting their investment into other countries such as Vietnam and India,” Zhou Rong, a senior researcher at the Chongyang Institute for Financial Studies of the Renmin University of China, told the Global Times on Friday.
The numbers speak volumes about China remaining a desirable investment destination for global investors, Zhou said.
By category, MOFCOM said the actual use of foreign funds in high-tech industries saw a 33.6-percent surge.
Investment from South Korea and Germany focused on high-tech fields, Chinese experts said, noting that chips and vehicles are core areas of foreign investment. The Regional Comprehensive Economic Partnership also plays an important role in bilateral trade.
German investment in China is more focused on automation, including green economy, as Germany is the most technologically advanced in this
sector in the EU, Zhou noted, expecting further bilateral cooperation.
As for US investors, Tian Yun, former vice director of the Beijing Economic Operation Association, said US investment in China is mainly concentrated in the fields of new-energy vehicles and parts, as well as machinery and equipment.
Though there have been some investment outflows to Southeast Asian countries due to lower labor costs, it does not conflict with their investment plans in China, which is more about collaboration in high-tech industries and in line with China’s innovationdriven development strategy, Bai Ming, deputy director of the international market research institute at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Friday.
“Thanks to the integrity of China’s industry chains and China’s emphasis on innovation, these high-tech investors from Europe and the US can easily find suitable partners in China,” Bai said.
MOFCOM attributes the growth to the fact that China has effectively coordinated epidemic prevention and economic and social development, which offered good prospects and broad opportunities for multinational companies.
Investing in China means a large market with 1.4 billion people including more than 400 million in the middleincome group, sound infrastructure, complete industrial support, abundant human resources and overall social stability, Chen Chunjiang, an official of MOFCOM, said at the briefing.
A day ahead of the data release, a meeting of the Political Bureau of the Communist Party of China Central Committee was held on Thursday, which analyzed the current economic situation and arranged economic work for the second half of this year. The meeting said it is necessary to create a good policy and institutional environment, so that state-owned enterprises dare to work, private enterprises dare to venture, and foreign enterprises “dare to invest.”
“The meeting was intended to make foreign companies feel relaxed about China’s investment environment,” said Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing.
Western countries led by the US have taken political and economic measures to bring investments back to their own countries or make them leave China, putting the enterprises in a dilemma. Furthermore, China’s dynamic zero-COVID policy was hyped and demonized by Western media, which also made investors hesitate, Gao said.
“It is the right time for the government to tell overseas enterprises that China’s investment environment will not change, and China’s opening-up policy will not change,” Gao said.