A view of Shanghai, China's major financial hub and destination for foreign investment Photo:VCG

China will make greater efforts to attract and utilize foreign investment, with more areas to open wider and more restrictions to be lifted. Utilizing foreign investment is an important part of China's policy of opening-up, said an official from the Office of the Central Financial and Economic Affairs Commission of the Communist Party of China Central Committee, in response to external hype that "foreign investors are fleeing China."

Affected by the continued downturn in global foreign direct investment (FDI) and a relatively high year-earlier base, foreign investment into China in the first 10 months of 2023 fell by 9.4 percent year-on-year, but the amount was still at a record high, the official was quoted as saying in a Xinhua News Agency report, in a detailed interpretation of the just-concluded Central Economic Work Conference.

The official said that there are many reasons behind recent fluctuations in foreign investment data. For example, geopolitical risks have risen significantly, with some countries pushing for industrial and capital repatriation and introducing restrictions on China-related investment.

The COVID-19 pandemic curbed on-site visits and communication, resulting in a lack of understanding of the actual situation in China by multinational companies, and even a certain degree of misunderstanding and misreading, which affected investment decisions, the official said.

The official noted that it is normal that some labor-intensive industries make gradual transfers, due to the change in comparative advantage, "which is determined by economic factors and is normal."

Analysts said that China will remain the most attractive FDI destination in the world, and more foreign investment can be expected to flow into China, as its economy is basically back on track to recovery and its business environment has been continuously improved.

The drop in the scale of FDI inflows does not mean that the country is less attractive to global investors. China's economy has basically returned to normal, and foreign investment will stick to this huge market, Pan Helin, joint director of the Research Center for Digital Economics and Financial Innovation, affiliated with Zhejiang University's International Business School, told the Global Times on Monday.

Analysts said that compared with the scale of foreign investment inflows, the change in the number of newly established foreign-funded enterprises is actually more valuable for reference. Capital seeks profit. The US now has high interest rates, so international capital will surely flow to the US in the short term to make "quick money."

Nearly 42,000 foreign-invested enterprises were newly established in China in the first ten months, up 32.1 percent year-on-year.

Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times on Monday that "if a foreign company is optimistic about the Chinese market, it will set up a legal entity in China and operate, which is a long-term investment. Therefore, such data can better reflect foreign enterprises' optimism about China's long-term economic prospects." 

The earlier-quoted official said that the country will fully lift restrictions on foreign investment in the manufacturing sector, expand the opening-up of the services sector in areas such as telecommunications and medical care, and strive to remove hidden barriers affecting foreign investment, so as to ensure equal access for domestic and foreign investment in areas outside the negative list in accordance with the law.

China will also ensure that foreign-funded enterprises receive national treatment and promote fair competition, while further facilitating people-to-people exchanges, the official said.

"China still has many favorable conditions to attract foreign investment, with a huge market scale - a middle-income population of 400 million people - and a per capita GDP of over $12,000, which will provide enterprises with vast opportunities of cooperation. Meanwhile, China has a complete industrial system," the official noted.