The growth of foreign direct investment in China will maintain its
sound pace this year, thanks to the country's robust economic recovery
and moves to upgrade its industries and further expand local demand,
experts and business leaders said on Monday. Despite the fact that many foreign economies fully resumed production
later last year, the completeness of their industrial and supply chains
cannot compete with China's, said Liu Xiangdong, a researcher at the
China Center for International Economic Exchanges in Beijing. Due to China's high vaccination rate and the swift recovery of its
manufacturing sector, services sector and foreign trade, the nation has
emerged as a safe and lucrative place for global capital, supported by
the dual-circulation development paradigm-in which the domestic market
is the mainstay and the domestic and foreign markets reinforce each
other, Liu said. After surpassing the United States as the world's biggest recipient
of foreign investment last year, China's actual use of foreign capital
soared 35.4 percent on a yearly basis to 481 billion yuan ($75.3
billion) in the first five months of this year. The volume surged 30.3
percent from the same period in 2019, data from the Ministry of Commerce
showed. Meanwhile, foreign investment in the service industry came in at
381.9 billion yuan between January and May, up 41.6 percent
year-on-year. Chen Bin, executive vice-president of the Beijing-based China
Machinery Industry Federation, anticipated that China's attractiveness
as a location for FDI will continue to grow in the second half of 2021,
as the COVID-19 pandemic has seen a resurgence in export-oriented
countries, including India, Vietnam, Malaysia and Thailand, in recent
months. "If both domestic and global manufacturers in those countries are
severely disrupted by the pandemic and stop working, it will have an
impact on the global supply chain, and more FDI may keep flowing into
China this year," said Ding Yifan, a senior research fellow at the
Institute of World Development at the Development Research Center of the
State Council. Nearly 60 percent of European companies plan to expand their business
in China this year, compared with 51 percent last year, according to a
survey released last week by the European Union Chamber of Commerce in
China. About half of the surveyed companies said that their profit margins
in China are higher than the global average. This proportion was 38
percent last year. Toni Petersson, CEO of Oatly Group AB, a Swedish food and beverage
company, said the company will bring its first plant in China in
Ma'anshan, Anhui province, into operation later this year. Supported by a local innovation team, the company, apart from
supplying plant-based milk, will tailor exclusive products such as ice
cream for Chinese consumers to offer them more options, he said. US multinational conglomerate Honeywell said it plans to invest in China's refinery sector over the next five years. "We see China's carbon-neutral commitment as an opportunity to join
hands with Chinese partners to realize the refinery transformation by
converting crude oil into more and more petrochemical products, or even
completely into petrochemical products," said Henry Liu, vice-president
and general manager of Honeywell Performance Materials and Technologies
Asia-Pacific. Ren Xingzhou, former director-general of the Institute for Market
Economy of the Development Research Center of the State Council, noted
that stabilizing foreign investment inflows is a vital policy target, as
it is key to technological upgrading and ultimately to long-term
growth. "China has leapfrogged ahead of many advanced economies in newly
emerging areas such as e-commerce, electric vehicles, artificial
intelligence and new infrastructure projects, but needs to continue its
technology upgrading in other areas, including environmental protection,
and the agricultural and manufacturing industries," she added. Vorwerk Group, a German industrial and technology company, will
establish a digital solution center in Shanghai in the second half of
this year to facilitate its transformation from a manufacturing company
to a service-oriented manufacturer. "This move will help many global companies better adapt to China's market," said Cha Sheng, general manager of Vorwerk China.
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