GT Voice: Overseas FDI inflows to China likely to accelerate
Published: Mar 07, 2022 08:49 PM
Long bets on Chinese assets brightest choice amid global volatility. Illustration: Tang Tengfei/GT

Illustration: Tang Tengfei/GT

As global markets have entered a period of voracious volatility amid the escalating Russia-Ukraine conflict, the fast spread of the Omicron variant, and a sluggish economic recovery, the signal of stability stemmed from China's two sessions will offer valuable certainty to the global economy. 

And with China standing out as a stable "oasis" in the tumultuous world, it could well become one of the top destinations for foreign investment in the coming months.

Despite the challenging external environment, China's overall advantages in attracting foreign investment won't change as long as the country's economic fundamentals remain solid and healthy.

Foreign investment inflows into China reached a new high in 2021, growing 14.9 percent year-on-year to reach 1.15 trillion yuan ($182 billion). The figure marked the first time in nearly a decade that China achieved a double-digit growth in terms of foreign investment, and the momentum has kept accelerating in 2022. Foreign direct investment into China rose 11.6 percent in January from last year.

All these numbers speak volumes for the continuing strong appeal of the Chinese market for foreign investment at a time when the global markets are roiled by uncertainties, which is a clear indication of growing confidence on the part of foreign investors in the future of  China. Such confidence stems from China's stable economic performance, continuously improving business environment and ever-expanding opening-up efforts over the past few years.

Since the outbreak of the COVID-19 pandemic, China has not only taken the lead in bringing the virus under firm control, but also registered steady economic growth with its resilient industrial chains. 

In terms of major economic indicators, the Chinese economy in 2021 expanded 8.1 percent year-on-year and its foreign trade surpassed the $6 trillion mark for the first time. It is the resilience and dynamism in the Chinese economy that has become key to attracting foreign investment inflows.

Meanwhile, China's pace in opening up to the outside market is accelerating too. According to Liu Rihong, a senior official at the State Council Research Office, China's foreign investment 'negative list' has cut down the number of items restricted or prohibited to foreign investors by nine since the beginning of the coronavirus outbreak, and China has allowed full foreign ownership of passenger car manufacturing since the start of this year. These concrete measures showed that no matter how the external environment changes, China will always adhere to its opening-up pace at its own rhythm.

Moreover, this year's government work report to the National People's Congress also made clear China's efforts to attract foreign investment, a signal telling the continuing stability in China's macro policy to protect foreign investors. 

China will make greater use of foreign investment by further cutting the negative list for foreign investment and ensuring national treatment for all foreign-invested enterprises, according to the work report submitted to the national legislature on Saturday.

Of course, all the above-mentioned advantages do not mean there will be no challenges facing China's economy. With the economic recovery now slowing in other countries, they will also introduce more favorable policies to lure foreign investment. However, as long as China continues to maintain its growth momentum and encourage domestic consumption, the huge Chinese market will always be a promising destination for international capital.