Rising foreign investment a vote of confidence in China's market

China Plus Published: 2019-07-11 21:40:52
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Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

China's Ministry of Commerce revealed on Thursday that the country's actual use of foreign capital in the first half of this year rose 7.2 percent year-on-year to reach 478 billion yuan (around 70 billion U.S. dollars). The growth rate is 40 basis points higher than that recorded for the first five months and 80 basis points higher than the figure for the first four months of this year. This accelerating growth shows that foreign investors are confident in China's market despite the backdrop of slowing global growth.

Apple's new Mac Pro on display at the Apple Worldwide Developers Conference in San Jose, California, on June 3, 2019. The Wall Street Journal has reported that the new Mac Pro will be built in China. [Photo: IC]

Apple's new Mac Pro on display at the Apple Worldwide Developers Conference in San Jose, California, on June 3, 2019. The Wall Street Journal has reported that the new Mac Pro will be built in China. [Photo: IC]

According to the ministry, foreign investment in the first half of this year had two notable characteristics. First, investment was moving into the middle and upper reaches of the value chain. Foreign capital utilized in China's high-tech industry increased by 44.3 percent compared to the same time last year, accounting for 28.8 percent of the total. Investment in high-tech manufacturing grew by 13.4 percent, and investment in the high-tech service industry increased by 71.1 percent. The second notable characteristics was the steady increase in investment from major source countries, including South Korea (up 63.8 percent), Japan (up 13.1 percent), Germany (up 81.3 percent), and the European Union (up 22.5 percent).

Foreign direct investment fell 13 percent globally in 2018 but recorded a 4 percent growth in China. The continued growth in the first half of this year once again shows how appealing the market is to international investors and provides more evidence for the resilience of China's economy. This resilience can be seen in the decision last month by the World Bank to keep its expectations for China's growth this year unchanged because it is capable of dealing with external challenges, while at the same time lowering its forecast for global growth.

As China goes through an economic restructure and industrial upgrade, its capacity for innovation is constantly improving. These conditions, taken together with the country's advantages in terms of the industrial supply chains it can offer, have encouraged foreign investors to deepen their position in China's market. The promises President Xi Jinping made at the G20 summit in Japan last month to speed up the country's opening, together with measures taken over the past couple of years to improve the country's business environment, have helped to reinforce the confidence of foreign investors. Multinationals including Tesla, Exxon Mobil, BASF, and LG are expanding their presence in China, and it has been widely reported that Apple is planning to move production of its new Mac Pro computer, the only major product Apple assembles in the United States, to China.

The data released by the Commerce Ministry this week is an affirmation of the strength of China's economy, and it should come as no surprise. China is shifting to a model of development that is increasingly reliant on high-quality growth, and foreign investors can see that this offers huge potential to the participants in China's market.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of chinaandgreece.com, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.