This aerial photo taken on Aug. 1, 2023 shows a view of the China (Shanghai) Pilot Free Trade Zone in east China's Shanghai. (Xinhua/Fang Zhe)
BEIJING, Dec. 7 (Xinhua) -- Foreign enterprises have continued scaling up investment in China's manufacturing sector against the backdrop of a slowdown in global economic recovery and sluggish cross-border investment.
Enormous market potential, coupled with a wide range of application scenarios for innovative products and technologies, are luring multinational companies to enter the Chinese manufacturing field.
At the same time, China has introduced a string of favorable policies to promote high-quality development of manufacturing and high-level opening-up, providing convenience for foreign investment.
-- Expanding investment
Many foreign companies have been revving up investment in China's manufacturing industry since the start of 2023. The signing of cooperation agreements and the materialization of investment projects mirror the confidence foreign investors have in China's manufacturing sector.
In May, Danish refrigeration industry giant Danfoss Group inaugurated its global refrigeration research and development (R&D) and testing center in north China's Tianjin Municipality. Covering an area of approximately 7,000 square meters, this is Danfoss' most advanced and largest scroll compressor R&D and testing center across the world, with a total investment of 140 million yuan (about 19.56 million U.S. dollars).
The operation of the center is an important step of Danfoss to move from "manufacturing in China" to "creating in China". It also reflects the company's confidence in China's green development, according to Arthur Xu, president of Danfoss China.
In July, the third phase of Schneider Shanghai Power Distribution Electrical Apparatus Co., Ltd. started production in Shanghai's Pudong District. The completion of this new 6,500-square-meter plant is expected to increase the factory's overall production capacity by 30 percent, accelerating green and low-carbon transformation of power system in China and the world.
"Since this year, we have further increased our investment in China, intensifying the efforts in innovation and R&D," said Yin Zheng, executive vice president of Schneider Electric and president of the company's China and East Asia Operations.
In November, Volkswagen (Anhui) Components Co., Ltd., Volkswagen Group's first wholly-owned battery system plant in China, started production in Hefei, capital of east China's Anhui Province.
This shows the company's dedication to locally developing and producing top-notch backbone components for electric vehicles in China, according to Olaf Korzinovski, executive vice president of Volkswagen Group China.
China's actual use of foreign investment in manufacturing rose 1.9 percent year on year to 283.44 billion yuan during the first 10 months of 2023, data from the Ministry of Commerce showed.
"In recent years, China's manufacturing sector has witnessed a significant increase in terms of positive factors attracting foreign investment," said Li Dawei, research fellow with the Academy of Macroeconomic Research.
-- Enormous market potential
As of specific sectors of manufacturing, advanced manufacturing has been a key direction of foreign investment. Data shows that from January to October this year, the actual use of foreign investment in China's high-tech manufacturing industry increased by 9.5 percent, with that of the medical device and instrumentation manufacturing industry and the communication equipment manufacturing industry seeing year-on-year growth of 34.6 and 14.8 percent respectively.
"Chinese market holds vast potential and expansive room for development, allowing Schneider Electric to achieve rapid growth here," said Yin.
At the meantime, China is witnessing increasing factor endowment of high-quality factors including scientific research and development personnel, technical workers and advanced technology, attracting multinational companies to come and set up high-tech industrial R&D and manufacturing bases, according to Li.
In the third quarter of this year, the China Council for the Promotion of International Trade surveyed 700 foreign enterprises, 67 percent of which were from the manufacturing sector. The surveyed enterprises identified technological innovation and R&D as the greatest development opportunity of the Chinese market for three consecutive quarters.
"Many of the high-end products we have developed in recent years are innovative results integrating global resources and Chinese wisdom," said Zhang Yihao, president and CEO of GE Healthcare China.
-- Favorable policies
China has been introducing policy measures to reduce the negative list for foreign investment access, especially for the manufacturing sector, providing convenience for foreign companies to invest in the country.
Manufacturing restrictions in pilot free-trade zones (FTZs) have already been reduced to zero, according to Li, noting that the pilot FTZs have been taking steps to optimize business environment, encouraging foreign capitals to flow into high-tech industries such as new energy vehicles, integrated circuits, and biomedicine.
In 2022, the actual use of foreign investment in high-tech industries within 21 pilot FTZs increased by 53.2 percent year-on-year, far exceeding the national average of 28.3 percent.
As China continues to open its door, more policy dividends are being released. At the third Belt and Road Forum for International Cooperation, China announced that it would remove all restrictions on foreign investment access in the manufacturing sector, meaning that the scope of full market access for foreign investors to the manufacturing sector will be expanded to the whole country, going beyond the FTZs.
This is an important measure toward building new systems for a higher-standard open economy, promoting further improvement of the country's management system on foreign investment, said Li.
In the future, China will continue to improve foreign investment utilization levels by supporting eligible pilot FTZs and Hainan Free Trade Port to align their economic and trade rules with international standards of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economic Partnership Agreement. The country will also listen to the opinions of foreign enterprises in a timely manner and respond to their concerns through roundtable meetings and other ways, as a bid to further optimize foreign investment environment, attracting global enterprises to invest in this promising land. (Edited by Su Dan, Yu Huichen with Xinhua Silk Road, sudan@xinhua.org)
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