The Ministry of Commerce responded that the actual use of foreign investment in China decreased by 2.7% in the first half of the year

On the 19th, at the press conference on business work and operation in the first half of 2023 held by the State Council Information Office, Vice Minister of Commerce Guo Tingting introduced that in the first half of the year, China's actual use of foreign investment was 703.65 billion yuan, a decrease of 2.7%.

Guo Tingting stated that China's absorption of foreign investment is basically stable. Since the beginning of this year, we have made every effort to carry out the "Investment in China Year" series of activities, and made greater efforts to attract and utilize foreign investment. The number of newly established foreign-funded enterprises has grown rapidly, with 24000 new foreign-invested enterprises established in the first half of the year, an increase of 35.7%. The quality of investment attraction has also continued to improve, with investment attraction in high-tech industries increasing by 7.9%, accounting for an increase of 3.9 percentage points to 39.4%, with investment attraction in high-tech manufacturing industry increasing by 28.8%.

In recent years, the scale of China's investment attraction has continued to rise. In 2022, the actual amount of foreign investment used nationwide was 1232.68 billion yuan, a year-on-year increase of 6.3% according to comparable standards and an increase of 8% in US dollars. In 2021, the amount of foreign investment absorbed was 1149.36 billion yuan, a year-on-year increase of 14.9%, and a year-on-year increase of 20.2% in US dollars.

Zhu Bing, Director of the Foreign Investment Management Department of the Ministry of Commerce, said, "We believe that fluctuations in short-term data do not affect the sustained optimism of foreign investment in China's development prospects, and the overall trend of expanding investment in China has not changed."

Previously, the head of the Foreign Investment Department of the Ministry of Commerce also stated when discussing the foreign investment data for the first five months that foreign investment is a market behavior, and multinational companies have a certain cycle from making investment decisions to actually investing funds. Since the beginning of this year, many executives from multinational corporations have come to China for inspection, and foreign-funded enterprises are generally full of confidence in the prospects of China's economic development. They express their willingness to continue to deeply cultivate the Chinese market, invest in China, and cast a vote of confidence in the prospects of China's economic development through practical actions.

Slight decrease, but overall scale remains stable

Zhu Bing introduced that in 2022, against the backdrop of a 12% decline in global cross-border investment, China's absorption of foreign investment rose by 6.3% against the trend, and the actual amount of foreign investment used reached 1.2 trillion yuan, equivalent to 189.13 billion US dollars, an increase of 8%, setting a new historical high and firmly ranking second in the world. Since the beginning of this year, the world economy has slowed down and global cross-border investment has been sluggish. According to the 2023 World Investment Report released by the United Nations Conference on Trade and Development, due to multiple factors, global foreign direct investment continues to face downward pressure this year.

"Under this influence, combined with the high base of the same period in 2022, China's actual use of foreign investment in the first half of this year saw a slight year-on-year decrease of 2.7%, but the overall scale remained stable," Zhu Bing believes.

Zhu Bing emphasized that global cross-border investment is sluggish, international investment competition is intensifying, and the external environment for China's investment attraction is becoming more severe and complex. But at the same time, it should also be noted that the resilient, promising, and long-term fundamentals of the Chinese economy have not changed. The open market provides more opportunities for the development of enterprises in various countries. Our comprehensive investment advantages, consisting of a complete industrial system, complete infrastructure, abundant talent resources, and continuously optimized business environment, are also constantly strengthening.

Zhu Bing introduced that in recent years, the Ministry of Commerce has adhered to the implementation of the decisions and deployments of the Party Central Committee and the State Council, worked together with various regions and departments to solidly promote the work of stabilizing foreign investment, achieved the continuous expansion of the scale of foreign investment absorption, the continuous optimization of the investment attraction structure, and made positive contributions to promoting economic and social development and constructing a new development pattern.

Next, the Ministry of Commerce will focus on promoting a higher level of opening up to the outside world, strengthening foreign investment policy support, continuing to organize the "Investment in China Year" series of activities, and improving the level of foreign investment service guarantee.

Zhu Bing said, "We believe that with the joint efforts of all parties, the effects of various foreign investment policies and measures will gradually become apparent, the business environment will continue to optimize, and China will continue to become a hot spot for foreign investment and development."

In the second half of the year, there are also plans for a group of multinational company executives to visit China

Zhu Bing stated that recently, the Ministry of Commerce has noticed a continuous trend of executives from multinational corporations visiting China, conducting a comprehensive and in-depth investigation of China's business environment, and seeking new opportunities for investment cooperation.

"Minister Wang Wentao has met with visiting executives of multinational corporations more than 20 times this year, providing a detailed introduction to China's new policies and measures to attract and utilize foreign investment. He also had in-depth exchanges with these entrepreneurs on consolidating the existing foundation of cooperation and further tapping into the potential of cooperation. Zhu Bing emphasized that executives of multinational corporations have visited China one after another to conduct on-site inspections of the investment environment and seek new opportunities for development in China. This fully reflects the strong willingness of foreign investors to invest in China, and they are still very optimistic about the prospects of the Chinese market.".

According to statistics from the website of the Ministry of Commerce, in March, Wang Wentao met with the chairmen or CEOs of 13 multinational companies, including Budweiser Group, Procter&Gamble, Pfizer, Qualcomm, BMW Group, and ASML in the Netherlands. In April, Wang Wentao met with executives from BNP Paribas, Airbus Group, Intel, Eli Lilly Pharmaceuticals, as well as several business representatives from France and Germany. In May, Wang Wentao met with Tesla CEO Musk.

At the same time, the Ministry of Commerce also held forums for European enterprises, American funded enterprises, foreign-funded enterprises, Japanese funded enterprises, and foreign-funded enterprises in the chemical energy industry.

Zhu Bing introduced that recently, the Ministry of Commerce has upgraded and established a roundtable meeting system for foreign-funded enterprises on the basis of normalized communication mechanisms, expanding communication channels between the Chinese government and foreign-funded enterprises. This helps to further strengthen communication, respond to enterprise concerns in a timely manner, assist in mediating and resolving difficulties and problems in foreign-funded operations in China, and improve the effectiveness and pertinence of service guarantees.

Zhu Bing said that multinational corporations generally express that the Chinese market contains huge development opportunities, and the Chinese market is not an "optional" but a "necessary" option. They will continue to increase investment in China and deeply cultivate the Chinese market. "In the first half of the year, newly established foreign-invested enterprises in China increased by 35.7% year-on-year, which fully proves this," he said.

Since the beginning of this year, several foreign executives interviewed by First Financial reporters have also expressed that the Chinese market is very attractive.

Dai Pu, Co President of Roland Berger Global Management Committee, told First Financial reporters that he believes China is a very good market. "In terms of China's supply chain and scale, China has become a very attractive market." Dai Pu added that China's innovation capability is also attractive to foreign enterprises because innovation is the driving force of the entire industrial production trend.

The general manager of Asahi Kasei Investment Co., Ltd. in Japan, Hideyoshi Kondo, also holds an optimistic attitude towards the Chinese market. "The policies proposed by the Chinese government can be effectively implemented. The model of official, private, and research institutions working together to propose policies and achieve goals is conducive to continuous economic growth. If there is no impact of the epidemic in the future, I think the Chinese economy is a very optimistic situation," he said.

"China is shifting from a labor-intensive center to a labor-intensive and technology intensive center, combining the two. I believe that China will continue to be a key global manufacturing center for many years to come," said Hooke, Executive Director and Managing Partner of Aowei Consulting, an international management consulting firm

Hooke believes that multinational companies seeking opportunities in China will seek to develop upstream in the value chain, such as more technology driven manufacturing and emerging areas with advantages in China.

Zhu Bing revealed that according to preliminary understanding, there are still a group of executives from multinational companies planning to visit China in the second half of the year. We will provide them with the greatest convenience to inspect the investment environment, coordinate development strategies, and negotiate cooperation projects in China. The door to China's opening up will continue to widen, and we welcome multinational corporations to continue investing in China, sharing the benefits of China's vast market and open development.