Restrictive measures in response to the COVID-19 pandemic have triggered concerns among financiers with investment environments across various economies. Which country is most attractive to foreign investment? The answer is China, according to the World Investment Report 2021 released by the United Nations Conference on Trade and Development on June 21.According to this report, in 2020, foreign direct investments (FDI) around the world plunged by 35 percent over 2019. Asia was the only region where gross FDI saw a positive growth, with that for China increasing by 6 percent.
This growth rate of 6 percent was secured against the backdrop of great changes unseen in the past century plus a once-in-a-century pandemic sweeping the globe. It's a proof of foreign investors' confidence in China's business environment and its overall economy, which they believe will bring them satisfying return of investment.
Statistics of the first five months of 2021 further confirm the international capital's confidence in the Chinese market. According to China's Ministry of Commerce, these first five months witnessed more than 18,000 new foreign-invested enterprises established in China, up 48.6 percent over the previous year, and 12.4 percent over the same period of 2019. The Business Confidence Survey 2021 released by the EU Chamber of Commerce in China shows that 73 percent of surveyed businesses made profits in 2020, while COVID-19 was ravaging the rest of the world, and 60 percent of them plan to expand their business in China.
The year 2021 marks the 20th anniversary of China's accession to the World Trade Organization. Always trying to align itself with standard international practices, in the past two decades, China has continuously enhanced its own business environment to make it fairer, more transparent and more convenient by pushing forward various reforms. China's reform and opening-up policies of the recent two decades aim to create a better environment for investment, lowering the access threshold, enhancing services to investors, and promoting fair competition across the Chinese market.
China offers national treatment to foreign investors, supplemented by the negative list and security review of foreign investment systems. International investors can get to know China's investment policies on official websites of via the relevant authorities. As for those who have already invested in China, they will receive help in terms of production, operations and other sections of their business from these authorities, should any difficulties occur along the way.
Foreign businesses enjoy national treatment not only in terms of approval procedures, but in every section of their operations. An array of rescue measures in taxation, finance and social security, adopted amidst the COVID-19 pandemic, also applies to foreign-invested enterprises. Policies on land supply, qualification approval, program application and human resources, etc., are equally practiced among Chinese and foreign-funded enterprises.
Shrinking negative lists point to rosier investment prospects in China. A four consecutive years' revision of negative lists for foreign investment market access in both piloted free trade zones and the rest of the country from 2017 to 2020 has cut access-limiting measures by two thirds. China's manufacturing sector has basically opened up to foreign investors while also keeping the door further open to foreign investments in sectors that are closely related to the nation's security, such as finance, energy and national defense. The catalogue of industries that foreign investment is encouraged to engage in keeps expanding. Industries like hi-tech, energy saving, environmental protection, modern logistics and information services are especially welcoming to foreign involvement.
The Chinese law provides legal protection to the legitimate rights of foreign investors. The Foreign Investment Law and Regulation on Optimizing the Business Environment, in effect since January 1, 2020, helps putting foreign investor minds at ease.
Foreign-invested enterprises might feel business operations are not entirely effortless in China due to COVID-19-induced lockdowns and restrictions, and thus may begin to worry about the deterioration of China's investment environment. This is a groundless worry. These restrictions cover all of society, not targeting just them or certain types of businesses or sectors only. As the most vibrant market in the world, China is also an active champion of economic globalization. The nation will only open its door wider to the outside world, which implies an increasingly convenient environment for international investment.
(Print Edition Title: China, the FDI Magnet)
