(Economic Watch) What advantages does "overweight China" give international investors?
China News Agency, Beijing, February 18 (Reporter Wang Enbo) "For every dollar invested (in China), we will get more advantages." Charlie Hathaway, an American investor and vice chairman of Berkshire Hathaway Munger recently stated in a public occasion why he is optimistic about the Chinese market.
There are more and more international investors holding such a view of "overweight China".
A striking example is that in 2021, China's actual use of foreign capital exceeded 1.1 trillion yuan (RMB, the same below), a record high and a year-on-year increase of 14.9%.
Among them, investment in high-tech industries and service industries has grown rapidly, and the scale and quality of investment have increased.
Entering 2022, China is still the favored target of foreign investment.
In January, China's actual use of foreign capital was 102.28 billion yuan, a year-on-year increase of 11.6%, achieving a "good start".
At the 2022 first centralized signing ceremony of foreign-funded projects held by the Shanghai Municipal Government recently, 53 foreign-funded projects were signed, involving biomedicine, electronic information, automobiles, fashion consumer goods and other fields, with a total investment of US$5.44 billion.
Among them, there are 21 projects with an investment of more than 100 million US dollars.
In the financial market, the trend of increasing holdings of Chinese assets is also quite obvious.
According to statistics, at the end of January 2022, the denomination of bonds custody of foreign institutions in CCDC continued to rise, increasing to 3.73 trillion yuan.
Standard Chartered Bank released a report predicting that the Chinese bond market will continue to outperform other global bond markets in 2022, and the annual foreign capital inflow is expected to be about 700 billion to 800 billion yuan.
The prospect of global recovery is full of fog. What advantages can "overweight China" give international investors?
The analysis believes that stable economic fundamentals and policy expectations are important considerations.
Liu Jie, head of China macro strategy at Standard Chartered Bank, said that under the background of global monetary policy differentiation, some global investors, especially those with a long-term strategy, are turning their assets to the Chinese market, mainly because the interest rate in the Chinese market is more stable and has " "safe haven" effect.
Liu Jie further pointed out that the "hawkish" attitude of central banks in developed markets has become increasingly aggressive due to intensified inflation pressures, and overseas bond markets have accelerated to decline, while the People's Bank of China has not followed this trend.
At present, China's bond yields are still relatively high, the monetary policy is relatively loose, and the strong international balance of payments brings the expectation of RMB stability.
Driven by these three factors, the Chinese bond market will continue to outperform other global bond markets this year.
A better business environment and greater opening-up have also become the reasons for China to gather foreign capital "centripetal force".
This year's local two sessions, local government work reports have focused on creating a market-oriented, legalized, and international business environment.
Guangdong, Chongqing, Zhejiang and other places have deployed the construction of pilot cities for business environment innovation, and many provinces have proposed to further deepen the reform of "decentralization, management and services", which are expected to facilitate the development of foreign capital in China.
Since the beginning of the year, the expansion and opening up of industries in various fields has been steadily advanced, and the official entry into force of the Regional Comprehensive Economic Partnership (RCEP) has attracted much attention.
The analysis believes that the closer integration of economic and trade exchanges among RCEP member countries will make China a more important partner in the regional economy.
Closer trade and economic integration may increase the incentive for RCEP members to increase their holdings of renminbi assets.
China's financial industry, as the "vanguard" of opening up, has also continuously implemented relevant commitments.
In January, Schroders Bank of Communications Wealth Management received the approval from the China Banking and Insurance Regulatory Commission for opening, becoming the third Sino-foreign joint venture wealth management company to be approved to open.
In February, BlackRock CCB, a joint venture wealth management company with the participation of BlackRock, the world's largest pension professional management institution, was approved to participate in the pilot project of China's pension wealth management products.
There are more opportunities and fewer restrictions for foreign institutions to conduct business in China.
Shen Jianguang, chief economist of JD.com, said that China's continuous optimization of the business environment has further attracted foreign investment.
In the future, benefiting from the advantages of the large domestic market, complete industrial facilities, and abundant human resources, China's investment will continue to maintain a high growth rate, and the spillover effect of foreign capital in the fields of talents and technology will be further released.
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