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Investment

Foreign investment thriving in China

September 19, 2019


Abstract : Since the first foreign-invested company entered China about 40 years ago, China's economic development has been closely connected with foreign investors.

BEIJING, Sept. 18 (Xinhua) -- Since the first foreign-invested company entered China about 40 years ago, China's economic development has been closely connected with foreign investors.

EXPANDING SCALE

After China started to implement the reform and opening-up policy in the late 1970s, it soon enforced the law on equity joint ventures, laying the legal foundation for attracting foreign investors.

From 1983 to 1991, foreign direct investment (FDI) in China went from 920 million U.S. dollars to 4.37 billion dollars.

As China started to work toward building a socialist market economy in 1992, a total of 48,764 foreign-invested enterprises were registered that year, surpassing the total amount for the previous 13 years.

From 1992 to 1997, FDI in China surged from 11 billion dollars to 45.3 billion dollars, growing at an average annual rate of 32.7 percent.

After China entered the WTO in 2001, foreign business giants started to set up wholly foreign-owned enterprises, equity joint ventures and contractual joint ventures in the country.

In 2018, FDI into China reached 138.3 billion dollars, 151 times that of 1983 and representing an average annual rate of 15.4 percent.

By the end of 2018, FDI inflow to China had ranked second in the world for two consecutive years and first among developing countries for 27 consecutive years.

Over 960,000 foreign-invested enterprises had been set up in China by the end of last year, with the accumulated foreign direct investment exceeding 2.1 trillion dollars.

At present, the country has attracted investment from over 200 countries and regions. In 2018, major investments came from Asia, the European Union, North America and free port areas.

INCREASINGLY DIVERSE BUSINESS

Starting along the southeastern coast of China about 40 years ago, the foreign companies has extended their businesses from labor-intensive industries, especially the manufacturing sector, to industries ranging from services to high technology.

As service industries such as information, finance, wholesale and retail, accommodation and catering sectors attract more investment, the tertiary sector has become the main destination of foreign investment in China.

Last year, 53,696 new foreign firms in the service sector were registered, accounting for 88.7 percent of all newly registered foreign-invested companies.

So far, foreign investment has spread to high-tech sectors including computer, integrated circuit and intelligent manufacturing.

Today, China is home to more than 2,000 regional headquarters and R&D centers of multinational companies, seeing improving quality in utilizing foreign investment as well as optimizing the structure of industries.

Emerging in the southeast regions of China, foreign investment moved inward along the border and the rivers of the country as well as to port cities.

In 2018, investment in the eastern region accounted for 85.5 percent of the total foreign investment, while the central and western regions attracted 17.9 percent and 20.4 percent of the total.

BRIGHT FUTURE IN CHINA

China has been making consistent efforts to optimize its business environment and embrace investors worldwide. The country advanced to a global ranking of 46 in terms of ease of doing business last year, up from 78 in 2017, according to a World Bank Group report.

In March 2019, China's national legislature passed the foreign investment law, the landmark legislation for foreign investment, which will come into effect on Jan. 1, 2020.

According to the law, China will create a stable, transparent, predictable and fair market environment.

The country will set up six new pilot free trade zones to bring the total number to 18, which serve as pioneers to test new forms of foreign investment management, trade facilitation and transformation of government functions.

The country will also lift the investment quota limit for approved foreign investors to boost financial reform and opening up.

Determined to safeguard free trade and integrate itself into economic globalization, China will continue its win-win cooperation with investors around the world.

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Keyword: China economy foreign investment

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