China to stabilize foreign investment despite COVID-19 challenges
Published: May 05, 2022 09:21 PM
Illustration: Tang Tengfei/GT

Illustration: Tang Tengfei/GT

At this critical juncture when many Chinese provinces and cities are trying to balance economic normalcy and anti-epidemic efforts amid a battle against Omicron, some Western media have intensified their hype about the impact of the country's active anti-epidemic policy on foreign companies. The Financial Times on Thursday said that China's zero-COVID stance is a warning to investors; VOA on the same day claimed that a large number of foreign investors plan to leave the Chinese market.

The ferocious Omicron flare-up has indeed caused great challenge to foreign businesses in China since March, but the "business exodus" played up by foreign media is a complete distortion of the facts. According to a survey released by the European Union Chamber of Commerce in China on Thursday, the proportion of European companies considering shifting their investment plans to other markets this year - about a quarter - is indeed larger than in previous years. However, it is still relatively small comparing to the majority of foreign firms remaining faith in the colossal market.

As Chinese authorities attach great importance to facilitate foreign businesses' operations while protecting public health, foreign businesses' confidence has actually been boosted by China's effective measures to promote production resumption. For example, after US electronic vehicle manufacturer Tesla's Shanghai Gigafactory resumed production on April 19, the company reportedly will further expand production in the city.

Stabilizing foreign investment is one of the main tasks for China to stabilize economic growth this year. On April 29, a CPC top leadership meeting emphasized the need to expand high-level opening-up, noting that it is necessary to actively respond to the needs of foreign companies and stabilize foreign capital and foreign trade. 

China's Ministry of Commerce (MOFCOM) has established a special working group on key foreign investment projects to help foreign companies coordinate and resolve specific issues such as resumption of production, personnel entry, logistics and transportation during this latest Omicron battle. The ministry also promised that during the next stage, it will continue to closely monitor the situation of the epidemic, cooperate with relevant departments and local governments, and respond quickly to new problems reported by foreign companies.

Recent data from MOFCOM showed that foreign direct investment flowing into China rose by 25.6 percent to 379.87 billion yuan ($59.09 billion) year-on-year in the first quarter of this year. Viewing the long-term trend, the sound fundamentals of China's economy and its array of policy options have provided foreign companies with confidence to continue to expand their investment in the market.

A survey conducted by China Council for the Promotion of International Trade on foreign companies' degree of satisfaction of China's policies shows that 86 percent of the surveyed enterprises were satisfied with China's foreign investment stabilization policy. Although some foreign companies admitted that their revenue will be affected this year, the vast majority of foreign companies still regard China as one of the major strategic markets.

Facing the current challenges that exceed expectations, China is expected to adopt multiple strategies to stabilize foreign investment throughout the whole year. 
China will continue to adopt measures like closed-loop management and whitelists to promote the resumption of work and production in an orderly manner to stabilize supply chains while fighting the epidemic at the same time. 

China has been further ramping up efforts to expand opening-up, such as implementing measures like the national foreign investment negative list. Meanwhile, China can consolidate the ongoing market protection for foreign companies and further improve the business environment.

As the Regional Comprehensive Economic Partnership has taken effect this year, China can make good use of advantages brought by the framework to encourage foreign companies to expand investment into emerging fields. China can also use the major economic and trade exhibitions such as the China International Import Expo, the Canton Fair, and the Service Trade Fair to increase investment promotion efforts. 

The author is an editor with the Global Times.