Why foreign capital is "long China"
China Newsweek reporter: Halik
Published on April 2023, 4, the 24th issue of China Newsweek magazine
At the end of March, more than 3 executives from well-known foreign companies came to China intensively, taking the opportunity of the "China Development Forum 2023 Annual Conference" (referred to as the "CDF Annual Conference") and the "Boao Forum for Asia Annual Conference 2023", which have resumed offline holding of two important forums.
Apple CEO Cook posted a group photo at Apple's Beijing Sanlitun store, Qualcomm President and CEO An Meng attended the Beijing "Xiaoyou" meeting, and said on Weibo, "This kind of meeting and chat feels so good!" ”
For a time, China became an important stop on the itinerary of many executives of multinational companies - more than 100 corporate executives visited one after another, setting off a "wave of visits to China". From the China Development Forum to the Boao Forum for Asia, from business visits to participating in the "Year of Investing in China" activities, they have only one ultimate goal in this trip: "long" China.
At a time when the global economy is full of uncertainty, China has assumed the role of "certainty" by virtue of its strong economic resilience and potential. For China, in 2023, when the economy is fully scrambling, foreign investment is also particularly important.
On December 2022, 12, Xi Jinping, general secretary of the CPC Central Committee, pointed out at the Central Economic Work Conference that greater efforts should be made to attract and utilize foreign investment, "not only to retain high-quality stock foreign investment, but also to attract more high-quality foreign investment, and improve the quality and level of trade and investment cooperation." ”
Premier Li Qiang held a discussion with representatives of Chinese and foreign entrepreneurs attending the 3 Boao Forum for Asia Annual Conference in Boao, Hainan on the afternoon of March 30. He pointed out that he hopes that entrepreneurs will play a leading role in boosting confidence and improving expectations, "We have always attached great importance to attracting and utilizing foreign investment, and the next step will be to further relax market access, support various open platforms to accelerate the formation of institutional systems and regulatory models in line with international rules, expand the network of high-standard free trade zones facing the world, and solidly promote the high-quality development of the 'Belt and Road'." ”
Recently, the government has repeatedly expressed its position, and new policies have been issued frequently. Many foreign company leaders told China Newsweek that they will continue to invest in China. At present, the list of people coming to China is still lengthening, investment projects are still expanding, and the "next China" is still in China.
Executives are coming, investing more
How hot is this wave of foreign company executives' "visits to China"? Conclusions can be drawn from the tight schedule of ministers.
According to the Ministry of Commerce website, in the six days from March 3 to March 23, Minister of Commerce Wang Wentao met with at least 3 executives of multinational companies, including Zhan Muren, chairman and CEO of Procter & Gamble, and Schneider, CEO of Nestlé Group. In early April, Wang Wentao also met with the heads of Lilly Pharmaceutical, Intel, Airbus and other enterprises and representatives of French enterprises.
In addition, during the CDF annual meeting, Jin Zhuanglong, Secretary of the Party Group and Minister of the Ministry of Industry and Information Technology, met with the heads of BMW, Bosch, Broadcom, Corning, Mercedes-Benz, Pfizer, Schneider Electric, Siemens and other multinational enterprises. The main responsible persons of the National Development and Reform Commission, the China Banking and Insurance Regulatory Commission, the State Administration for Market Regulation and the State-owned Assets Supervision and Administration Commission of the State Council also met with representatives of some foreign-funded enterprises. During the talks, these departments stressed that they would unswervingly promote high-level opening up and said that they would provide services and guarantees for the development of foreign-funded enterprises in China.
"The visits of the heads of large multinational companies show that they see the Chinese market as a safe haven for global capital and finance, as well as the best place to invest. In addition, the 'wave of visits to China' also means that some manufacturing, technology and capital around the world are accelerating their transfer to China. Wei Jianguo, vice chairman of the China Center for International Economic Exchanges and former vice minister of the Ministry of Commerce, told China Newsweek.
"China is an exciting investment hotspot and a powerful engine for the global economy to emerge from the downturn. The Chinese market is the largest market for us, a very special market, and a leader in innovation. Amway Global CEO Pan said at the CDF Annual Meeting. Many executives of foreign companies also said that this is their first visit to China in the past three years, and they look forward to exploring new cooperation opportunities in China.
"We believe CEOs will be excited about China when they visit China. China is a very active and large market, and when they visit, it is possible to invest. This is a gradual recovery process. Michael Ho, president of the American Chamber of Commerce in China, told China Newsweek.
The dense footsteps are accompanied by a large number of investment projects. On April 4, Airbus announced the construction of a second production line in Tianjin to expand the final assembly capacity of the A6 family aircraft, doubling its production capacity in China.
On March 3, the day of the CDF Annual Meeting, biopharmaceutical company AstraZeneca announced that it has expanded its investment in China again, planning to invest about 25 million US dollars to build a production and supply base. The company's global CEO Su Boke said, "This is only the first step, and we will invest more in the future." Earlier, Amway also said that it would invest 4 million yuan to upgrade the Guangzhou production base and establish a big health sharing platform.
In January this year, Swire Coca-Cola's Kunshan project, with a total investment of 1 billion yuan, was successfully signed, making it the largest single investment in China to date. The global flexible packaging model factory built by the Swiss company Amcor with an investment of 20 billion yuan in Guangdong was officially put into operation. 10 foreign-funded projects with a total investment of more than 9 million US dollars were started, put into production and signed in Wujiang, Jiangsu Province.
According to a report by the Nikkei newspaper in January, Panasonic Holdings is accelerating its investment in China, investing more than 1 billion yen in the three years from 2022 to 2024 to build or expand more than 500 home appliance and air-conditioning equipment factories in China. The investment is considered to be Panasonic's largest investment in China's home appliances and home equipment business since 10.
Just as hot as the "wave of visits to China" of foreign company executives is the "Year of Investment in China" series of investment promotion activities held for the first time in China. There is a foreign media image metaphor, "China is rolling out the red carpet to attract foreign executives".
Ministry of Commerce spokesperson Shu Hengting once said that this year the Ministry of Commerce will vigorously carry out a series of activities to attract investment in the "Year of Investment in China". Through a series of "invite in" and "go out" promotion activities, build a platform, smooth channels, accurate docking, and comprehensively display investment opportunities and comparative advantages in various places.
On March 3, the "Year of Investing in China" local special promotion event was held in Guangdong, attended by executives from more than 29 multinational companies such as BASF, Panasonic and HSBC, as well as representatives of foreign business associations, and 74 foreign-funded projects were signed, with a total investment of 905.<> billion yuan.
"China's economy is a powerful propeller and anchor for the recovery and development of the world economy. China is still a 'promised land' and 'highland' for cross-border investment. Han Wenxiu, deputy director in charge of daily work in the Office of the Central Financial and Economic Commission, stressed at the CDF annual meeting.
How to attract foreign investment?
Despite the accelerated restructuring of the global industrial chain and supply chain, the intensification of the game of major powers, and the existence of challenges such as unstable expectations, foreign investors continue to increase their investment in China.
Data show that in the past three years, China's actual utilization of foreign capital has increased from US$2020.1444 billion in 2022 to US$1891.2684 billion in 4, a record high. In the first two months of this year, the actual use of foreign capital in the country was 6.1 billion yuan, a year-on-year increase of 397.1%, equivalent to 1.<> billion US dollars, a year-on-year increase of <>%.
The relevant person in charge of the Department of Foreign Investment of the National Development and Reform Commission told China Newsweek that since the beginning of this year, China's economic operation has continued to rise, the growth momentum has been continuously strengthened, and the overall development trend has been good, providing broad opportunities for the development of foreign-funded enterprises.
With the overall fundamentals of China's economy warming, GDP in the first quarter of this year increased by 4.5% year-on-year and 2.2% month-on-month, and market expectations improved significantly.
According to the latest World Economic Outlook report released by the International Monetary Fund (IMF) on April 4, the global economy will grow by 11.2023% in 2, while China's economic growth rate will reach 8.5%, with positive spillover effects. "China's economy is recovering strongly, which is important not only for China, but also for the world." IMF Managing Director Georgieva pointed out at the CDF Annual Meeting that China's economic contribution to the world economy will reach 2/2023 or even more than 1/3 in 1.
"The excellent performance of China's economy provides a good development environment for multinational foreign-funded enterprises. China's economic growth rate has always ranked among the top of the world's major economies, and its good development prospects have laid a solid foundation for Johnson & Johnson to deepen its cultivation and investment in China. Song Weiqun, senior vice president and chairman of Johnson & Johnson in China, told China Newsweek.
In recent years, strong consumer demand has cultivated a super-large market, driving China to become the "home turf" of some foreign companies. According to Shiseido's 2022 financial report, the Chinese market surpassed Japan as its largest market. Yu Feng, president of Honeywell China, told China Newsweek that China has developed into Honeywell's second-largest market in the world and the company's largest growth market. Song Weiqun also said that today, China is not only one of the fastest growing markets for Johnson & Johnson's global business, but also a new innovation strategy market for the company.
"In terms of size, there are 14.11 billion Chinese, accounting for nearly 20% of the world's total population. As far as the market structure is concerned, China is a single large market, with a unified legal system, a unified tax system, unified business rules, and unified language and culture. As far as the industrial base is concerned, China is an economy with an integrated industrial chain of all factors, all categories and all industrial chains. Huang Qifan, former mayor of Chongqing, said at the CDF annual meeting.
Huang Qifan further said that the combination of these three will produce dividends in three aspects. The first is the cost dilution effect of "economies of scale". It can greatly dilute the cost, so as to form the core competitiveness of industrial development. The second is the "gravitational field" effect. The ultra-large-scale market means that the symbiotic phenomenon of mutual promotion and symbiosis between supply and demand will be very significant, and the demand side is constantly updating and upgrading to attract "supply"; The supply side will also bring more and more innovative products. The third is the "sea effect". In the face of external shocks, ultra-large markets can give the domestic economy greater room for internal circulation and stronger resilience to external risks.
"At present, foreign companies pay more attention to the vitality of the Chinese market. According to the statistics of the Ministry of Commerce, more than ninety percent of foreign-funded enterprises in China are mainly oriented to the Chinese market. But competition is also fierce, and if foreign companies are far from China, it will weaken market sensitivity. On the contrary, investing in China can get closer to the market, adjust production capacity in time according to market changes, and carry out production and marketing business. Bai Ming, a member of the Academic Degrees Committee of the Research Institute of the Ministry of Commerce, told China Newsweek.
Speaking at the CDF Annual Meeting, Stephen Hartung, Chairman of the Board of Bosch AG, said, "We will expand our local manufacturing operations in various countries so that our products can be brought to market faster and meet consumer needs. ”
Wei Jianguo mentioned that China has the most complete categories, the longest chain, the most complete upstream and downstream, and the most advanced industrial chain and supply chain in the world. China also has a variety of talent teams, including blue-collar workers, high-end talents, engineers and R&D personnel. Moreover, China's political stability and the creation of a market-oriented, rule-of-law, and internationalized first-class business environment are China's attractions.
In addition to the perfect infrastructure, "digitalization" is also a Chinese advantage emphasized by multinational enterprises. "According to December 2022 data, more than 12% of our sales revenue is generated through digital platforms." Yang Ke, CEO and co-chairman of Budweiser Asia Pacific, told China Newsweek that the Chinese market continues to provide advanced experience and best practices for other markets in terms of digital business and e-commerce.
博世集团董事会主席史蒂凡·哈通在CDF年会上也提到，他们非常依赖在中国的供应链，数字化是另一个重要因素，它可以打造供应链的韧性。“实时数据可以让我们更好利用全球产能，监测运输进展，最终使我们能够更加容易适应市场的变化。”
目前，中国已建成全球规模最大、技术领先的网络基础设施。截至2022年底，拥有231万个5G基站，移动物联网连接数达18.45亿户。国务院发展研究中心市场经济研究所所长王微在CDF年会上表示，数字经济跟整个数字产业的发展非常紧密，能创造新的消费体验和消费场景，也让零售店铺获得了新的获客通道和管理工具。同时，大量的企业通过数字化手段加快实现，包括企业内部的制造设备管理、生产者服务网络建立、与上下游产业生态联合融合等。
魏建国表示，中国的数字经济已经驶入了快车道，预计2025年中国的数字经济总量会突破60万亿元，占整个GDP的45%。“数据已经成为关键的生产要素，无论是生产还是营销，外资企业想要发展都需要大量数据做决策支撑，而中国能提供这样的技术和条件。”
去年底召开的中央经济工作会议把“更大力度吸引和利用外资”作为重点任务之一。2023年的政府工作报告强调，扩大市场准入，加大现代服务业领域开放力度，落实好外资企业国民待遇。多家外资企业告诉《中国新闻周刊》，近段时间中国政府的积极表态，为其在华长期发展注入了新动力。
外资利好信号不断，相关部门也在稳外资方面搭建了不同侧重点的协调机制。
重点外资项目工作专班是商务部会同相关部门于2020年建立，以强化疫情期间对外资企业的服务保障，成为问题诉求解决的重要渠道。随着疫情防控进入新阶段，该工作专班工作重点发生变化。
商务部新闻发言人束珏婷表示，商务部将充分发挥重点外资项目工作专班机制作用，做好对接服务，为企业高管来华开展投资洽谈提供更多便利，推动更多外资项目早签约、早落地、早建设。
另一个协调机制是重大外资项目工作专班。由国家发展改革委会同有关部门和地方政府成立，协调解决重大外资项目落地涉及国家层面的规划、用地、用海、环评、能耗等问题，开辟绿色通道推进项目实施。
国家发改委外资司有关负责人向《中国新闻周刊》介绍，纳入重大外资项目工作专班协调范围的项目主要包括投资规模大、技术先进、有助于稳定产业链供应链、有需要国家层面协调解决的诉求等特点。截至目前，已有六批重大外资项目纳入工作专班协调范围，其中19个项目实现全部或部分投产。计划总投资1700亿美元，单个项目投资均超过10亿美元，目前已完成投资超过630亿美元。
外资新变化
While attracting and stabilizing foreign investment, China is also stepping up its efforts to open up in different industries.
After 7 reductions, the negative list for foreign investment access has become fewer and fewer, from 190 items to 27 now, manufacturing entries have been zeroed, and the opening up of the service industry has continued to expand. On January 2023, 1, the Catalogue of Industries Encouraging Foreign Investment (1 Edition) was officially implemented, with a total of 2022,1474 entries, a net increase of 2020 articles and a revision of 239 articles compared with the 167 edition, further expanding the scope of encouraging foreign investment in semiconductors, new materials, new energy and other fields.
With the transformation and upgrading of China's industrial structure, the layout of foreign investment is also changing.
"Originally, foreign companies imported more raw materials to China and used labor to re-export, but now they are more willing to integrate into China's industrial chain and supply chain." At present, the number of high-tech foreign enterprises is growing faster and is no longer highly concentrated in labor-intensive industries. Bai Ming said.
This is also reflected in the data released by the Ministry of Commerce. In 2022, the actual use of foreign capital in the high-tech industry will be 4449.5 billion yuan, an increase of 28.3%, accounting for 36.1% of the country, an increase of 2021.7 percentage points over 1. Among them, the investment in computer communication manufacturing and pharmaceutical manufacturing increased by more than half, reaching 67.3% and 57.9%.
Commenting on the changes that have taken place in the pharmaceutical manufacturing sector, Takeda Pharmaceutical's global president and CEO Wei Boke said that a very obvious progress in the Chinese market is the gradual establishment of a favorable environment that encourages clinical value-oriented innovation and R&D.
"In the past, it was difficult for us to implement some clinical trials in China, such as recruiting patients for clinical trials in China, and the arrangement of the entire clinical trial will be different from other markets in China, which are some of the challenges we faced in conducting clinical trials in China in the past. However, in recent years, this situation has completely changed, China's development in clinical trials has become very competitive in the world, and many clinical trials of innovative drugs can be carried out in China. Weiboke said.
Unlike previous years, the manufacturing investment data recorded a "double rise" in 2022. In absolute terms, after the actual use of foreign capital in the manufacturing industry decreased in 2020 due to the impact of the epidemic, it increased to US$2021.337 billion in 3 and further climbed by nearly US$2022 billion in 500. In terms of the proportion of foreign capital actually used in the entire industry, the proportion of foreign capital will be broken in 2022, rising from 2021.18% in 6 to 26.3%.
It is worth noting that thanks to the comprehensive liberalization of foreign investment access restrictions, investment in the automobile manufacturing industry increased by 2022.263% in 8, becoming an important driver for the significant increase in investment in the manufacturing industry. Among them, foreign investment related to new energy vehicles is in the limelight.
On June 2022, 6, BMW Group's third vehicle plant, BMW Brilliance's Lydia plant in Shenyang, officially opened its Lydia plant, with a total investment of CNY 23 billion. The opening of the Lida plant is an important step in the BMW Group's accelerated electrification transition, enabling it to switch to 150% electric vehicle production at any time according to market demand.
In January this year, Germany's Bosch Group also announced that it would invest about 1 billion yuan to establish a Bosch new energy vehicle core components and autonomous driving R&D and manufacturing base in Suzhou, and the company expanded its Taicang plant and opened a new R&D center in Shanghai last year.
A senior executive of a foreign company told China Newsweek that various applications in China's new energy industry have brought them very big business opportunities. "Now, many new energy vehicles, new materials, and new technologies have taken root in China, and if they don't keep up here, they will lose the market."
In addition, China is also strengthening its support for manufacturing investment. On October 2022, 10, the National Development and Reform Commission and relevant departments jointly issued Several Policies and Measures on Promoting the Expansion of Foreign Investment with a Focus on the Manufacturing Industry, Stabilizing Stock and Improving Quality, proposing 25 major measures to further increase investment in the manufacturing industry and promote the high-quality development of foreign investment.
Xie Lincan, associate researcher of the International Cooperation Center of the National Development and Reform Commission, believes that the above policies focus on guiding foreign-funded enterprises to participate in the upgrading of the domestic industrial structure, which is conducive to further giving full play to the advantages of foreign-funded manufacturing and promoting China's economy to integrate more deeply into the global economic system.
The service sector has also become another major destination for foreign investment in China. According to AgeLifePro statistics, by the end of 2020, 11 companies from at least 40 countries and regions had entered the Chinese pension market, covering 17 provinces and 44 projects had been built.
In December 2022, the State Council agreed to carry out a comprehensive pilot project of expanding the opening up of the service industry in six cities, including Shenyang, Nanjing, Hangzhou, Wuhan, Guangzhou and Chengdu, for a pilot period of three years. So far, the number of comprehensive pilot projects for the expansion of China's service industry has increased to 12. Since the launch of the comprehensive pilot project of expanding the opening up of the service industry in Beijing in 6, the expansion of the opening up of the service industry has formed a "3+N" pilot pattern.
"Compared with the manufacturing industry, China's service industry is relatively backward in opening up. At the same time, the service industry has a lot of room for growth, and there is broad investment space for foreign investment. In the future, the financial sector will be more open to the outside world. Bai Ming said.
The "next China" is still in China
"China is a huge market and it is still attractive to all kinds of companies." AmCham China President Michael He said.
As China's economy enters the recovery track and is constantly stimulating market potential, many foreign-funded enterprises are accelerating their layout speed and seizing the consumer market. For example, American athleisure brand Skechers plans to open 2023 new stores in China in 700; Starbucks proposed the "2025 China Strategic Vision" to open 3,3000 new stores in the next three years.
A number of foreign companies interviewed also told China Newsweek that China is its strategic market and will continue to invest in China. The American Chamber of Commerce in South China released a report on February 2 that the Chamber of Commerce surveyed more than 27 companies showing that China remains the most popular hotspot for corporate investment, with more than ninety percent of companies surveyed seeing China as one of the most important investment destinations. 200% of companies surveyed plan to reinvest in China in 75.
Market access rules are one of the biggest concerns of foreign investment. In these aspects, there is still room for optimization in China's attraction of foreign investment. Jens Eskelund, vice president of the European Union Chamber of Commerce in China, told China Newsweek that European companies mainly want equal market access and a level playing field between domestic and foreign companies, and value any policy that can restore predictability, reliability and efficiency of China's business environment.
Jens Eskelund further said that after the adjustment of epidemic prevention and control policies, the Chinese government has focused more on attracting foreign investment and working to restore the country's business environment.
Wei Jianguo suggested that efforts should be made to keep the negative list to a minimum, so that more foreign companies can feel that they can develop better in China.
According to AmCham China's 2023 China Business Climate Survey, about 60 percent of companies surveyed said they would consider increasing investment if China's market access was on par with that of the United States. Among them, about 29% of the companies surveyed said that if China expanded market access, it would increase investment by at least 20%. More than seventy percent of companies in the technology and R&D industries are willing to increase investment by at least 11%.
At a press conference held on March 3, Minister of Commerce Wang Wentao said that in 2, in terms of foreign investment work, greater efforts will be made in investment promotion, service improvement, opening up and environmental optimization, and efforts will be made to retain high-quality existing foreign capital and bring in more high-quality foreign investment.
The relevant person in charge of the Foreign Investment Department of the National Development and Reform Commission told China Newsweek that in 2023, the National Development and Reform Commission will implement the detailed policies already introduced; Study the revision of the negative list for foreign investment access; Better play the role of the development zone as a platform for attracting investment; Do a good job in promoting foreign investment and services, persist in promoting high-level opening up, and promote the high-quality development of the use of foreign capital.
Wei Jianguo said that while making greater efforts to attract foreign investment, while stabilizing the stock and expanding the increment, it is also necessary for large, medium and small projects to go hand in hand. It is also necessary to pay attention to regional balance, and the central and western regions should regard attracting foreign investment as an important task.
Bai Ming believes that the opportunity for foreign investment layout in the future lies in whether it can be in line with the direction of China's economic development, "or need to come to China with core competitiveness".
"If China's GDP growth rate remains at 2% annually over the next decade, the cumulative growth will be on par with India's GDP today. If growth reaches 5%, the cumulative growth will be about equal to the current GDP of India, Japan and Indonesia combined. By 2030, the number of high-income cities in China will increase to 93, covering 44% of the population. If you're looking for growth, the answer is pretty straightforward. The next 'China' is still in China. Daniel Ni, chairman of management consulting firm McKinsey China, said at the CDF annual meeting.
China Newsweek, Issue 2023, 15
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