Illustration: Chen Xia/GT

Uncertain factors including the Russia-Ukraine conflict and Omicron outbreaks in China are undermining Chinese assets' attractiveness, US media outlet CNN claimed on Monday. Citing most recent data from the Institute of International Finance (IIF), the report said "investors are ditching China on an unprecedented scale."

Since the outbreak of the Russia-Ukraine conflict, some Western media outlets have intensified the "investor flight" hype against China, with most of them using monthly capital flow data from the IIF as proof. The IIF data shows that China saw $17.5 billion worth of portfolio outflows last month, an all-time high, CNN said.

At the first glance, such data seems very concerning, but the hype has obviously largely exaggerated the possible impact of the short-term capital flows. These monthly figures are simply not representative of long-term capital flow trends, nor can they be used as a measure of the attractiveness of Chinese assets.

Recent data from China's Ministry of Commerce showed that foreign direct investment (FDI) flows into China rising by 25.6 percent to 379.87 billion yuan ($59.66 billion) year-on-year in the first quarter of this year. Under the unfavorable conditions of many uncertainties in global investment growth, China's actual use of foreign capital in the first quarter can achieve such a level, which fully demonstrates that Chinese assets are still very attractive to global investors.

Admittedly, from the Ukraine crisis to the domestic COVID-19 flare-ups, China's economy is facing mounting pressure beyond expectations. The fluctuation in China's stock market in recent days shows that investors' confidence remains fluid. But the short-term market volatility should not be used to badmouth the long-term performance of Chinese assets. 

Furthermore, CNN said that foreign investors fear China "could get caught up in sanctions" as the US had made such threats. And the rising interest rates elsewhere make China less attractive for foreign investments. Actually, what such claims reveal is that the real source of the current risks endangering global financial markets is the US' unilateral sanctions and irresponsible monetary policies. 

Against this backdrop, international investors view Chinese yuan-denominated assets as "safe haven" that is supported by the strong economic foundations of the world's second-largest economy.

Stabilizing foreign investment is one of China's main tasks for stabilizing economic growth this year. China has begun to take effective measures to resolve foreign investors' concerns, including disruptions caused by the COVID-19 epidemic and anti-epidemic efforts. Looking ahead to the whole year, China has sufficient means and economic strength to complete the task of stabilizing foreign investment.

In terms of specific measures, China will continue its efforts over the past few years to expand high-level opening-up and further improve the business environment to attract foreign investment. China is expected to further expand market access. In addition to its full industrial chain advantage in manufacturing, China is expected to roll out more support policies to promote the development of high-tech industries and services, which will also attract more foreign investment.

The "capital flight" hype has collapsed countless times in the past. As China swiftly finds a balance between anti-epidemic efforts and economic recovery, the solid foundations and strong resilience of its economy will once again boost investor confidence.

The bottom line is the attractiveness of yuan-denominated assets will continue to rise. The purchasing power parity index of the Chinese yuan against the US dollar is significantly lower than the current exchange rate between the two currencies, which means, in the long run, the attractiveness of Chinese assets will increase. 

In addition, China's sovereign debt to GDP rate is relatively low comparing with other major economies. That means China's sovereign credit is very stable, which is very attractive to foreign investors. China is expected to remain a top destination for foreign investment.

The author is an editor with the Global Times. bizopinion@globaltimes.com.cn