Foreign firms get further incentives

More intl investors see nation as ideal destination as opening-up accelerates

China's economy will become an even more attractive destination for high-quality and long-term foreign investment as a result of the nation's stepped-up efforts to shore up economic growth and push continuous progress in deepening reforms and expanding opening-up, said market watchers and business executives.

The positive factors contributing to this trend are still being released, with central government departments announcing new arrangements to further attract global capital.

For instance, the National Development and Reform Commission said that China will formulate comprehensive policies to further attract foreign investment and set up a higher-level opening-up system to attract global resources.

Meanwhile, the Ministry of Commerce said the country will revise administrative measures for foreign investors' strategic investment in listed companies to encourage overseas companies to invest in its stock market.

President Xi Jinping has stressed that new systems for a higher-standard open economy are a strategic move to proactively boost reform and development through opening-up.

Xi, who is also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, made the remarks while presiding over a meeting of the Central Commission for Comprehensively Deepening Reform on July 11.

He highlighted the importance of institutional opening-up and deepening institutional reform in investment, trade, finance and innovation, among other key areas of foreign exchanges and cooperation, to actively raise China's opening-up to a new level.

Xi also urged the country to leverage the strengths of its enormous market and attract global resources and production factors with China's strong domestic economy, in his article published in February in Qiushi Journal, the flagship magazine of the CPC Central Committee.

"We must not only retain existing high-quality foreign investment but also attract more high-quality investment. These efforts will help improve the level and quality of trade and investment cooperation," he said.

Highlighting China's massive market, well-developed industrial system and strong supply chain competitiveness, Ding Hongyu, senior vice-president of 3M Co and president of 3M China, said that the US multinational group will continue to invest in local manufacturing and innovation capabilities in China in the years ahead.

"The Chinese economy has shifted from high-speed growth to high-quality development. We will take advantage of emerging trends and focus on end markets where we can win," he said, adding that investing in fields such as automotive electrification, home improvement and consumer electronics all represent significant opportunities for 3M.

Echoing that viewpoint, Xiao Song, global executive vice-president of German conglomerate Siemens AG, said that China has deeply integrated into the global economy and become an essential link in global industrial and supply chains. Decoupling or severing ties with China would not be practical and would not benefit any country or company.

Upbeat about the Chinese market, the German company announced in mid-June that it will invest 140 million euros ($153.1 million) in Chengdu, the capital of Sichuan province.

Christoph Schrempp, chair of the Tianjin chapter board of the European Union Chamber of Commerce in China, said that European companies attach great importance to the position of the Chinese market in their corporate strategic layout.

"They will explore new areas of cooperation and seek new forms of collaboration in response to China's attractive investment opportunities, especially in the area of the green economy and high-end manufacturing," said Schrempp.

That sentiment is in line with the latest data. Foreign direct investment in China's high-tech industry grew 7.9 percent year-on-year in the first half of 2023, while that of high-tech manufacturing soared 28.8 percent year-on-year in the same period, data from the Ministry of Commerce showed.

In the meantime, China saw its newly established foreign-invested enterprises reach 24,000, a year-on-year increase of 35.7 percent.

Zhu Bing, director-general of the ministry's foreign investment administration department, said that apart from effectively implementing existing policies, the government will prioritize addressing the common concerns raised by foreign companies, including fair competition and investment facilitation.

New measures will also be introduced in the second half of the year to boost foreign investors' confidence, he added.

According to a survey released last week by the China Council for the Promotion of International Trade, nearly 70 percent of the surveyed foreign-funded companies are optimistic about the outlook for the Chinese market for the next five years.

The primary reasons cited by these global companies for investing in China include "large market size", "multiple preferential policies" and "complete industrial and supply chains", according to the survey's results.

Li Yong, vice-chair of the expert committee of the China Association of International Trade, said that China aims to capitalize on its economic scale to further enhance productivity and optimize resource utilization.

"This will offer foreign investors comparative advantages, enabling them to leverage China's position as the largest trading nation," he said, stressing that many multinational corporations have already prioritized this vision, as it aligns with their strategic agenda.

With manufacturers in China showing a strong demand for game-changing products and technical solutions, TE Connectivity Ltd, a Swiss connector and sensor manufacturer, plans to build its sixth plant for its automotive business unit to produce in-car entertainment systems and high-speed data connection related products in the country soon.

As China's automotive sector undergoes a transformation marked by innovation, speed and agility, automotive component suppliers must possess the crucial ability to rapidly respond to emerging technologies and applications, said Field Sun, vice-president and general manager of TE Automotive China.

According to China's State Administration of Foreign Exchange, the return on FDI on the Chinese mainland was around 9.1 percent over the past five years, while it was around 3 percent in Europe and the United States.