BEIJING, Jan. 14 (Xinhua) -- The beginning of 2019 has seen U.S. electric carmaker Tesla inaugurate construction on its Shanghai gigafactory, making it one of the pioneers to benefit from China's new policy that allows foreign carmakers to set up wholly-owned subsidiaries in China.
Also the largest foreign-invested manufacturing project in Shanghai's history, the Tesla factory sheds light again on how foreign investment rushes in for a share of the Chinese market as the country further opens up to the world.
China surpassed the United States and became the world's top destination for FDI for the first time by the end of June, 2018, according to the Report on Chinese Enterprises Globalization (2018) recently released by Center for China and Globalization.
The country attracted some 121.26 billion U.S. dollars worth of overseas investment in the first 11 months of 2018, up 1.1 percent year on year, according to data by China's Ministry of Commerce (MOC).
Increasing overseas investment into China could also be reflected in the growing number of foreign-invested companies, which grew by 77.5 percent on year to 54,703 during January to November.
Such growth could be attributed to China's policies on opening up wider to the outside world, experts say, noting that foreign direct investment (FDI) into China is likely to maintain high in the future as China vowing to continuously improve its business climate and facilitate foreign investment.
In June of 2018, for example, China released a shortened negative list for foreign investment, cutting items on the list down to 48 from 63, relaxing investment entry restrictions for 22 fields. Another new negative list was unveiled later in the month for foreign investment in FTZs, with listed items down to 45 from 95 in the previous version.
China's inbound M&A soared in 2018, accounting for half of China's total M&As, compared with one fourth in previous years. By November 22, 2018, inbound M&A deals totaled 51.65 billion U.S. dollars, up more than 40 percent on year, according to data released by Refinitiv, formerly Thomson Reuters Financial & Risk Business.
As to automobile, under the negative list that became effective on July 28, 2018, limits on foreign ownership of special vehicle and new energy vehicle manufacturing had been removed since July 28, 2018, and those of commercial vehicle manufacturing will be eliminated by 2020, and passenger vehicle manufacturing by 2022. Moreover, restrictions on the number of joint ventures possessed by a foreign company in China will also be lifted by 2022.
Following the new rules, Germany's BMW Group declared a plan on October 10, 2018 to increase its stake in BMW Brilliance Automotive, its venture with Brilliance China Automotive from 50 percent to 75 percent, and to extend the cooperation for another 22 years to 2040. Mercedes-Benz Parts Manufacturing & Service Ltd. inaugurated its first factory outside Europe in October 2018 in Lingang Area of Shanghai, the same industrial park where Tesla's gigafactory locates.
As to finance, at 2018 Boao Forum for Asia, Yi Gang, governor of the People's Bank of China, put forward more than ten specific measures to further open up finance industry, covering many aspects such as market access, restrictions over foreign ownership and the scope of business.
Take insurance industry for example, on May 23, 2018, Japanese insurance giant Mitsui Marine & Fire Insurance Company declared an investment of 74.7 billion yen (about 4.3 billion yuan) to purchase a 37.5 percent stake in BoCommLife Insurance Company Limited, a subsidiary of Bank of Communications.
With a 50 percent stake in AXA Tianping Property & Casualty, France-based AXA announced on November 27, 2018 that it had entered into an agreement with the five domestic shareholders including Tianmao Industry Group to purchase the remaining 50 percent stake. The completion of the deal will see AXA become a foreign insurer to take a 100-percent stake in AXA Tianping in China.
In securities industry, JP Morgan Chase, Nomura and UBS have submitted application materials to China Securities Regulatory Commission (CSRC) to set up a majority ownership securities (holding 51 percent stake in the new firm) in China.
In addition, on November 1, 2018, Japan-based Daiwa Securities Group Inc. announced its collaboration with Beijing State-owned Capital Operation and Management Center (BSCOMC) to establish a joint venture brokerage, 51 percent shares of which will be controlled by Daiwa and 49 percent by BSCOMC.
While foreign investors rushed into China, domestic companies also grew interest in taking in foreign investment for capital, resources and management experience, according to Feng Lin, CEO of DealGlobe.
Also, some large foreign companies are eyeing an expansion in China to avoid risks in international trade, reflected by the spike in large industrial projects in China...In general, attracting foreign investment is for a win-win." said Shi Miao (Cherrie), a partner in Baker McKenzie's Shanghai office.
China could present the biggest opportunity for growing investments in 2019, according to the UK's Lloyds Private Bank's Investment Outlook 2019. (By Niu Huizhe, Su Dan)
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