Beijing, 10 Oct -- Has foreign capital withdrawn from China on a large scale?

Author: The state is through train Li Xiaoyu

According to the latest data from the Ministry of Commerce, the amount of foreign capital actually used in China in the first three quarters of this year was 9199.7 billion yuan. Has foreign capital withdrawn from China on a large scale? To answer this question, we need to clarify three basic common sense.

First, how did foreign capital come from.

There are many factors that foreign companies consider when making investment decisions. In addition to long-term factors such as market size, per capita income, industrial structure, and labor costs in host countries, there are also many short- and medium-term factors, such as tax burden, interest rates, inflation, and capital account opening. These short- and medium-term factors change rapidly, and the choice of foreign companies may adjust accordingly. Simply put, it is where the cost is low and where to make money.

Moreover, the scale of direct investment projects varies greatly, and a single or several large projects will affect the amount of investment in the current period, which will also lead to large fluctuations in foreign capital inflows in practice.

In a word, foreign investment is a market behavior. Since it is a market behavior, it is impossible to always be calm and calm.

In the past year or so, the Fed has continued to raise interest rates, and interest rates have risen from near zero to 5.25%-5.5%, the highest level in 22 years. Under the lure of such high interest rates, the investment behavior of foreign companies has not been affected in the slightest, and the new investment in China has not fluctuated at all, which is impossible. Shouting "large-scale withdrawal of foreign capital from China" whenever there is a stir is either stupid or bad.

Infographic: Aerial photograph of container terminals. Photo by China News Agency reporter Lu Bo

Second, the investment situation should be comprehensively judged.

How well is China attracting foreign investment? There is contrast to the truth. In the first three quarters of last year, China's actual use of foreign capital exceeded 1 trillion yuan, reaching 10037,6.8 billion yuan, the highest level in the same period in history. With such a high base, the actual amount of foreign capital used in the first three quarters of this year fell by 4.9199% compared with the same period last year, but it was still 7.<> billion yuan, which is still quite large in absolute terms and a fairly good result on a global scale.

Are companies from developed countries reducing their investment in China? And it didn't. In the first three quarters, the actual investment in China by France, the United Kingdom and Canada more than doubled compared with the same period last year. These countries are all G7 members and "staunch allies" of the United States.

Has the high-tech sector lost its attractiveness to foreign investment? Nor is it. In the first three quarters, the actual use of foreign capital in China's high-tech manufacturing industry increased by 12.8% year-on-year, of which medical equipment and instrumentation manufacturing, electronics and communication equipment manufacturing increased by 37.1% and 21.5% respectively.

Infographic: Production in a manufacturing company. Photo by China News Agency reporter Lu Bo

Third, what determines the retention of foreign capital.

Since foreign investment is a market behavior, it is normal for some foreign companies to be forced to withdraw from China after losing the fierce market competition, or choose other places with lower costs due to rising factor costs, or increase capital and set up factories in other countries for supply chain reasons.

However, the "large-scale withdrawal of foreign companies from China" is not in line with economic laws and does not correspond to the truth.

Businesses value the return on the cost of revenue. For foreign enterprises, the large number of Chinese ports and strong consumption power mean that investment in China can enjoy market dividends and high returns. At the same time, China's comprehensive advantages in infrastructure, resources and industrial chain mean that costs are controllable. On the whole, China has had an incomparable competitive advantage for a long time.

Since the beginning of this year, many executives of multinational companies have repeatedly set off a "coming to China" fever, or to negotiate with business partners, or to meet with senior Chinese financial officials. Just two days ago, Minister of Commerce Wang Wentao also met with Apple CEO Tim Cook and Roche Chairman Shi Wan.

Foreign companies "voting with their feet" shows that China is still very attractive to global investors, and leaving China is definitely not an option.

In the first three quarters of this year, 37814,32 foreign-invested enterprises were newly established in China, a year-on-year increase of 4.<>%, which also shows that China still has a lot of growth potential to attract foreign investment in the future. (End)