Illustration: Luo Xuan/GT

The China Development Forum Fall Summit was recently held in Beijing. Against the backdrop of China-US trade dispute upgrades, the forum brought together 60 representatives from the US side, including former US government officials, well-known scholars and industry leaders. 

The representatives extensively exchanged opinions regarding China-US relations, the world economic order and global governance. They also provided insight to better understand the current trade disputes.

Due to the rise of trade protectionism in recent years and escalating China-US trade frictions, foreign direct investment (FDI) worldwide has shown a downward trend. However, in contrast to the global trend, there is more FDI flowing into China, which has become a highlight of China's economic numbers. 

The reasons behind this include China's vast market and steady opening-up policies. Multinational companies are generally optimistic about the Chinese market, enjoying the profit distributed from its growth, and are willing to further invest in China. 

Of course, China is facing external uncertainties. Experts at the forum believe that if the opening-up measures can be further implemented in the future and intellectual property can be better protected, China will still be a sought-after land attracting foreign investment from all around the world.

With the impact of the trade war, global FDI has seen a significant decline in recent years. Global FDI flows fell for three consecutive years - by 2 percent, 23 percent and 13 percent from 2016 to 2018. However, FDI in China has seen no sign of shrinkage. In 2018, there was a 3.7 percent increase of FDI in China. This shows that China's attractiveness to overseas funds is still strong regardless of its economic slowdown.

There are two main reasons to explain China's unique appeal to FDI. 

First, China's huge consumer market remains attractive to foreign investment. Since 2001, the volume of Chinese total retail sales has gained rapid growth. In 2009, China's retail sales were only half those of the US market. However, in 2019, China's retail sales are expected to reach $6 trillion, on par with the US. China expects its retail industry to surpass that of the US to become the world's largest in terms of retail sales volume.

The second is attributed to China's steady implementation of its reform and opening-up policies. The restrictions on foreign investment have drastically reduced and more industries have opened up for foreign investors. Since last year's Boao Forum, China has been striving to further its opening-up policy. Multinational corporations like Tesla, Exxon Mobil, BASF and BMW have already set foot in China.

In spite of the optimistic attitude toward the Chinese market, experts at the forum also mentioned current deficiencies in China's market transparency, fairness and regulatory policies, and put forward suggestions for improvement. Measures proposed in order to counter the shrinking of global FDI include speeding up the construction of international multilateral and bilateral free trade systems, strengthening the construction of international mechanisms related to intellectual property protection, building a more open and convenient environment to attract FDI, and facilitating the integration and synergetic supervision of the financial market. 

Representatives of multinational corporations at the forum also expressed their demands from the viewpoints of optimizing the investment environment, enhancing the rule of law, and improving the convenience and security of information and data exchange.

Amidst the anti-globalization trend and the China-US trade war, the China Development Forum underscored the high expectations held by international entrepreneurs concerning investment in China. Additionally, China continues to quicken the pace of its opening-up, as indicated in the recent cancellation of QFII and RQFII quotas by the State Administration of Foreign Exchange.

In response to the uncertainties of future China-US negotiations, China should actively encourage multinational companies to jointly defend globalization, but should also accelerate its opening-up and improve its business environment - reducing intervention, maintaining market fairness, increasing policy transparency and bettering intellectual property protection. These measures are helpful in resisting the trend of anti-globalization and boosting the confidence of global investors in China.

The author is chief economist with JD Finance. bizopinion@globaltimes.com.cn
Newspaper headline: China remains attractive to foreign capital despite rising anti-globalization trend