China remains a magnet of foreign direct investment (FDI) this year after overtaking the US as the world’s top destination for FDI in 2020.
The country experienced robust FDI growth in the first four months of 2021. The real FDI into the Chinese mainland rose 38.6 percent year on year to 397 billion yuan ($59 billion) during the January-to-April period, Ministry of Commerce data showed.
Foreign enterprises continue their enthusiasm toward the Chinese market. In a survey released in March by the American Chamber of Commerce in China, China remained the top investment market for more than 60 percent of surveyed companies. A total of 75 percent of the enterprises surveyed are optimistic about market prospects in China for the next two years.
As the first major economy to recover from the COVID-19 pandemic, China attracts foreign investors not only because of the size of its market, but also its economic resilience, its openness to global trade and the increasingly optimized business climate.
While many parts of the world were still plagued by the pandemic, China bucked the trend of a global downturn and became a stabilizer for cross-border investment. As its economy was picking up, China fully supported foreign-funded companies to resume production and effectively quickened the pace for them. Local governments rolled out policies to help the companies tackle challenges including COVID-19 prevention and control, transportation and financing. Local governments also helped stabilize companies’ expectations and confidence in the market. By the end of April 2020, 76.6 percent of the 8,200 major foreign-funded companies in China had recovered over 70 percent of their production capacity, a Commerce Ministry survey showed.
The country is opening up its markets and brings opportunities for global investors. International mega expos of imports, trade in services and consumer products open business windows for overseas companies against the backdrop of a global economic downturn. The State Council has expanded the free trade zone pilot programs across the country. In the first four months of 2021, more than 14,500 foreign-invested enterprises were newly established nationwide, up 50.2 percent year-on-year and 11.5 percent over the same period in 2019.
The ever-improving business environment also draws more global investors to China. The World Bank's Doing Business 2020 report ranked China 31st out of 190, a remarkable leap for the economy from 46th in 2019.
The landmark foreign investment law and related regulations took effect on the first day of 2020, providing legal safeguards for foreign investors’ interests. The new list of industries encouraged to receive foreign investment, which came into force in January, added 127 new sectors compared to its 2019’s version, welcoming inflows into the services industry and central and western regions of China. Earlier, the foreign investment negative list that took effective in July 2020 cut the number of sectors to 33 from 40 in the 2019’s list.
“Foreign companies are turning their backs on the United States, taking advantage of China's booming economy and superior management of the COVID-19 pandemic,” CNN said.
China is fertile ground for global investors. Eying high-quality development at the start of the 14th Five-Year Plan period (2021-2025), the world's largest FDI recipient will unswervingly make efforts to enhance its appeal to foreign investors and beneficially work with them.