The multiple effects of markets and policies have kept China attractive to foreign capital for a long time
China Economic Times: What are the reasons why China remains attractive to foreign capital?
LiqiangYang: The main reasons why China has been able to maintain its attractiveness to foreign capital for a long time, especially when global foreign direct investment has declined for three consecutive years, are mainly due to the following points.
First, China's economy has maintained rapid growth for a long time. The huge development potential and numerous investment opportunities are important reasons for attracting foreign investors. Although China’s average annual economic growth has declined slightly since entering the “new normal” stage of development, it has maintained an average annual growth rate of more than 6%, ranking among the fastest growing economies in the world, and China’s huge domestic economy Size and market demand are still key factors in attracting foreign investment in China.
Second, with China’s industrial upgrading and the innovative development of technology and business formats, China has developed a number of emerging industries with the most development potential and fastest growth in the world, such as cross-border e-commerce, new energy vehicles, sharing economy, etc. . These emerging industries, whether in terms of industrial scale, market capacity, or business model, are at the top level globally. Tesla's investment in building a factory in Shanghai is a typical example.
Third, in recent years, China’s further opening up and continuous improvement of the investment environment have undoubtedly maintained and enhanced China’s attractiveness to foreign investment. On the one hand, the ever-decreasing negative list of foreign investment market access provides new market access opportunities for foreign investors; on the other hand, it covers five batches of 171 free trade trials in areas such as trade and investment facilitation and business environment improvement. District reform experience is gradually replicated throughout the country, and the overall level of China's investment environment has been continuously improved, thereby further enhancing the attractiveness of foreign investment.
Fourth, under the impact of the "anti-globalization" wave, China has become the standard bearer and pillar of global multilateralism, which provides a rare good expectation for foreign investment, especially multinational companies, to invest in China. The "World Investment Report 2019" pointed out that in 2018, 55 economies introduced about 112 investment policy measures, of which 34% of them restrict or regulate foreign investment, a record high since 2003. In the current global overall foreign investment policy liberalization level has declined, the promulgation and implementation of China's "Foreign Investment Law", the continuous reduction of the negative list of foreign investment, and the gradual replication and promotion of 171 articles of the free trade pilot zone to the country all indicate that China Persist in the firm determination to further expand opening up, which has greatly enhanced foreign investment confidence in China.
The continuous inflow of foreign capital is a great affirmation of China’s economic growth potential and the improvement of the investment environment
China Economic Times: How do you view the continued inflow of foreign capital?
LiqiangYang:
First, the continuous inflow of foreign capital is a great affirmation of China's economic growth potential and the improvement of the investment environment.
Second, the inflow of foreign capital has provided a rare boost to China's rapid economic growth. The continuous inflow of foreign capital can not only create new employment opportunities and stimulate market vitality, but its technology and management spillovers can also help China's industrial upgrading and innovative development.
Third, the continuous inflow of foreign capital is conducive to the further integration and common development of the Chinese economy and the world economy. In the past 40 years of reform and opening up, one of the important driving forces for the integration and integration of the Chinese economy with the world economy has been foreign-funded enterprises and multinational companies investing in China. The development of export processing industry and processing trade dominated by foreign-funded enterprises has made great contributions to China's reform and opening up and the development of export-oriented economy. At the same time, with the help of export processing industry and processing trade, the Chinese economy can quickly participate in and integrate into the East Asian production network and the Asia-Pacific region. Value Chain. At present, the continuous inflow of foreign capital, especially the high-end manufacturing and service industries, will help promote the further integration and common development of the Chinese economy and the world economy.
Fourth, the continuous inflow of foreign capital and the "going global" of Chinese enterprises jointly promote the formation and development of China's two-way capital flow pattern. Since the reform and opening up, China has experienced the “bringing in” phase of foreign capital inflows. Around 2000, Chinese companies “going out” began to develop rapidly. At present, China has formed a basic pattern of two-way capital flows. According to statistics from the World Investment Report 2019, China's foreign capital inflows reached 139 billion U.S. dollars in 2018, and capital outflows reached 129.8 billion U.S. dollars, making China the second largest foreign capital inflow country and the second largest foreign capital outflow country in the world. It can be said that the two-way flow of capital is an important sign of a country's highly open economy. For example, the United States has long maintained its status as the world's largest foreign capital inflow country and the largest capital outflow country. The maintenance of the two-way capital flow pattern depends on the continuous inflow of foreign capital, rather than a single direction of capital outflow.
The trend of foreign capital inflow will maintain steady development
China Economic Times: What is the trend of foreign capital inflow in the future?
LiqiangYang: In the future, China's foreign capital inflow will maintain a small increase at the current level. The main reasons are as follows:
First, the global economic uncertainty caused by factors such as Sino-US trade frictions will further impact global investor confidence to a certain extent, and the impact of this factor will continue to deepen as the uncertainty continues, and at the same time The investment project cycle is gradually emerging, so it is unlikely that China's foreign capital inflow will increase substantially in the future.
Second, China’s continuous improvement of the business environment and reduction of the negative list, especially the gradual opening of the financial industry and other service industries, will increase China’s attractiveness to foreign capital to a certain extent, thereby laying a foundation for China’s foreign capital inflow to maintain its current development momentum. basis.
