China's use of foreign capital jump 22.6% in Jan-May in show of confidence in Chinese economy
Published: Jun 14, 2022 08:47 PM
A view of the Lujiazui area, a financial zone, in Shanghai Photo: VCG

A view of the Lujiazui area, a financial zone, in Shanghai Photo: VCG

China's actual use of foreign capital reached $87.77 billion in the first five months of 2022, up by 22.6 percent year-on-year, with investments from South Korea, the US and Germany leading the growth, data from the Ministry of Commerce (MOFCOM) showed on Tuesday.

The growth in foreign investment is particularly significant considering various challenges posed by COVID-19 outbreaks in several major cities and smears from Western media outlets about the Chinese market.

From January to May, actual use of foreign funds in the services sector rose 10.8 percent year-on-year, while actual use of foreign funds in high-tech industries saw a 42.7-percent surge, the MOFCOM said in a statement.

In terms of the source of investments, South Korea ranked first, with actual investment in China growing 52.8 percent, followed by the US with 27.1-percent growth and Germany with 21.4 percent.

By geography, China's central regions saw foreign investment grow by 35.6 percent, followed by the western regions with 17.9 percent and the eastern regions with 16.1-percent growth.

The important point is that China maintained stable economic operations while overseas markets have been going through increasing turbulence, 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 Tuesday.

China has stepped up efforts to improve its business environment in recent years, and it has been shortening its negative list for foreign investment and implemented a foreign investment law to expand opening-up and protect the legitimate rights and interests of foreign investment, Bai said.

Under such circumstances, investing in China obviously is safer and more predictable as it is hard to say when overseas markets will stabilize, Bai noted.

US stocks nosedived into a bear market on Monday (US time), with the Dow Jones down 2.8 percent, the Nasdaq Composite down 4.68 percent to its lowest level since September 2020, and the S&P 500 down 3.9 percent. That has triggered a global stock sell-off.

However, Chinese stock markets closed higher on Tuesday, with Northbound capital - foreign cash flowing into A-share markets - up 3.9 billion yuan ($579 million) the trading day. Northbound capital increased by 58.06 billion yuan during the past 30 days.

The overall Chinese market is becoming increasingly popular among foreign investors. In another major sign, more than 250 of the world's top 500 companies and leading enterprises have already registered to participate in the fifth China International Import Expo (CIIE), which is scheduled to be held in November. 

In contrast to foreign media outlets' ill-intentioned hyping of the "investor fleeing" story during recent Omicron flare-ups in China, many foreign firms are betting more heavily on the market. 

For instance, Japan-based clothing retail chain Uniqlo opened 12 new stores in China on June 3 alone, domestic news agency Economic Information Daily reported. From new-energy vehicle manufacturing to banking and financial institutions, foreign investors are eyeing the market with ambitious plans.

In the meantime, the latest data released by the Institute of International Finance (IIF) on June 7 showed that while most emerging markets saw continuous outflows in recent months, China saw net inflows of $4.7billion in May.

Market observers noted that given the strong resilience and promising prospects of the Chinese economy, the accelerating inflow of foreign cash into Chinese assets is not a whim, but a long-term trend.

Global Times