China Expects FDI in Actual Use to Hit USD140 Billion This Year
Liao Shumin
DATE:  Nov 05 2020
/ SOURCE:  Yicai
China Expects FDI in Actual Use to Hit USD140 Billion This Year China Expects FDI in Actual Use to Hit USD140 Billion This Year

(Yicai Global) Nov. 5 -- Foreign direct investment into the Chinese mainland in actual use is expected to reach USD140 billion this year, the commerce ministry said.

The prediction comes after the figure for the first nine months rose 2.5 percent from a year earlier to USD103.2 billion, according to the China Foreign Investment Statistics Bulletin 2020 the ministry published today, the first day of the third China International Import Expo in Shanghai.

China has bucked a global downward trend in FDI, which slumped 49 percent to USD399 billion in the first half of 2020, a report from the United Nations Conference on Trade and Development said last month.

“Our expectations and confidence in foreign investors’ long-term investing and operating in China have not changed,” Zong Changqing, director of the commerce ministry’s foreign investment department, said at a press conference.

“The practice of stabilizing foreign investment this year has once again proved that China’s super-large-scale market remains attractive for foreign investors,” he said, adding that China’s “comprehensive competitive advantages have not changed in industrial facilities, human resources, infrastructure, and so forth.”

Global FDI declined for three years in a row from 2016 to 2018, while last year it was just three quarters of what it was in 2015. Global FDI will continue to decline between 30 percent and 40 percent this year, UNCTAD predicted.

Meanwhile, China’s actual use of foreign capital hit USD549.6 billion from 2016 to 2019. It will climb to about USD690 billion during China’s 13th Five-Year Plan covering 2016 to 2020, notching up an average annual increase of more than USD10 billion based on a preliminary expectations, Zong said.

In the international context of a sharp decline in cross-border capital flows, the proportion of China’s FDI in actual use rose to 9.2 percent last year from 6.6 percent in 2015. And it is expected to gain further this year, Zong said.

More critically, China has further optimized its foreign investment structure. From 2016 to 2019, the service sector absorbed USD395.6 billion of FDI, an average annual growth rate of 2.2 percent, and its proportion rose to 73.1 percent in 2019 from 69.8 percent in 2015. Meanwhile, the high-tech sector attracted USD129 billion, an average annual growth rate of almost 24 percent.

Next Five-Year Plan

China's plan for foreign capital use during the 14th Five-Year Plan period to 2025 will focus on five areas, Zong said.

“No matter how unilateralism, protectionism, and anti-globalization resurge in the world, we will unswervingly expand [China’s] opening-up,” he said, adding that the country will also “continue to reduce the negative list for the admission of foreign investment, and further promote institutional opening-up, including that for rules and standards, and continue to open the Chinese market.

“That will definitely provide more opportunities for foreign investors,” Zong told reporters.

In terms of continuing to improve the foreign investment management system, China will maintain a system of pre-entry national treatment plus a negative list for foreign investment, speed up the formation of a foreign investment management system compatible with the new foreign investment law, optimize the foreign investment information reporting system, and strengthen supervision during and after investments.

China will also move forward with strengthening the construction of an open platform. The authorities will give pilot free trade zones more autonomy in reforms and opening-up, steadily promote the construction of the Hainan free trade port, boost the power of national economic development zones, support Beijing in building a comprehensive demonstration zone for the expansion and opening of the national service sector, and increase the number of nationwide comprehensive pilot projects to grow and open the services sector.

To further protect the legitimate rights and interests of foreign investment, China will implement its foreign investment law and regulations, continue to improve the open and transparent foreign-related legal system, strengthen the protection of intellectual property rights, gear up the investigation and punishment of counterfeiting and infringement, improve the complaints network for foreign-owned firms, and effectively protect the legitimate rights and interests of foreign investors.

In terms of continuing to optimize the business environment, China will go on optimizing the market-oriented legalized international business environment, accelerate the signing of free trade agreements and investment deals with countries and regions, and unswervingly promote free and convenient global trade and investment.

 
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Keywords:   Foreign Capital,FDI