Unveiling the future: China's embrace of global investment
In a new wave of high-level engagements, China has rolled out the red carpet for foreign companies, signaling a welcoming stance that resonates with optimism among global investors.
Our latest insights at Peking Ensight delve into the strategic interactions between China's top brass and international business titans, unveiling the burgeoning opportunities within the world's second-largest economy.
Presidential Reassurances: A future built on mutual prosperity
At the heart of Beijing's Great Hall of the People on March 27, an assembly of U.S. business luminaries found reassurance in President Xi Jinping's vision. With prominent figures like Blackstone's Stephen Schwarzman and Qualcomm's Cristiano Amon in attendance, Xi articulated China's commitment to a thriving, open market, inviting U.S. firms to deepen their roots in Chinese soil. The message was clear: China's doors are wide open to foreign investment, promising a fertile ground for growth and collaboration.
"China is comprehensively deepening reform and fostering a market-oriented, law-based and world-class business environment, creating broader development space for U.S. and other foreign businesses," Xi said, encouraging U.S. enterprises to "invest in China, cultivate the market, and grow their business." (Click here to learn more about the meeting)
Trailblazing Through the Provinces: Leadership in Action
The commitment to global integration was echoed in the recent tours of China's central and eastern provinces by President Xi and Premier Li Qiang. Their visits to foreign-invested enterprises underscored a hands-on approach to fostering a conducive business environment.
On March 18, Xi visited BASF Shanshan Battery Materials Co., Ltd., a Chinese-German joint venture and lithium-ion battery materials supplier in central China's Hunan Province.
Xi reiterated the country's determination to further opening up, and welcomed more foreign companies to invest and develop in China.
While inspecting Fujian Province last week, Chinese Premier Li Qiang walked into Coherent China, Inc., a subsidiary of the world-leading American manufacturer of optical materials and semiconductors.
After learning about the company's development in China, Li stressed creating a better business environment for foreign firms to thrive.
Ministerial Movements: Forging Ahead with Confidence
The narrative of openness and cooperation was further reinforced by Chinese Commerce Minister Wang Wentao. Having a fully-packed schedule last week starting on March 21, the minister engaged with dozens of global CEOs, including Apple's Tim Cook and Micron's Sanjay Mehrotra, and spotlighted the myriad of opportunities awaiting foreign enterprises. His message was one of unwavering support and encouragement for deeper integration into China's dynamic market landscape.
"China's focus on developing new quality productive forces and promoting high-quality development means vast opportunities for global enterprises, especially in fields like artificial intelligence and cloud computing," the minister said.
Spotlight on High-Quality Development
Many corporate leaders came to Beijing for the two-day China Development Forum (CDF), a high-level economic and business venue held each March to facilitate dialogue between government officials and global business leaders.
At the opening session on March 22, Premier Li Qiang delivered a keynote speech, where he reiterated China's commitment to fostering a world-class business environment, advancing institutional opening up, and "linking with the world at a higher level of openness."
Serving as a pivotal platform for dialogue, the forum not only spotlighted China's strategic pivot towards institutional openness but also highlighted the accelerated pace of international tech giants like Apple in seizing the vast market potential.
A Groundswell of Multinational Confidence
Eyeing opportunities in China's vast market, tech giants are quickening their pace to expand their local presence.
A few days before the CDF, Apple CEO Tim Cook arrived in Shanghai for the opening of a new flagship Apple store, which is set to become the company's second-largest retail store globally.
"There's no supply chain in the world that's more critical to us than China," Cook said while meeting with Chinese supply chain partners on March 20, "and we will continue to scale up investment in the supply chain, R&D, and sales in the country."
Apple has been working on its development in the country for over 30 years, and data shows that 151 of the company's 200 major suppliers have production activities in China.
Cook is not the only U.S. tech giant leader to visit China recently.
On March 21, AMD's CEO Lisa Su showed up in Beijing to attend the "AI PC Innovation Summit," where she announced a batch of partnerships to boost the local ecosystem of AI PCs, or artificial intelligence-capable PCs.
Greater China is a major R&D center for AMD, said Su, "we have over 4,000 elite engineers in China, responsible for SoC design of almost all AMD products."
Bullish about the region's development prospects, Su made commitments to establishing an AI center and setting up joint research programs with local developers and research organizations in Greater China.
The growing allure of the Chinese market is evidenced by the robust foreign direct investment (FDI) influx, with 2023 witnessing a notable surge.
In 2023, foreign direct investment (FDI) in the Chinese mainland in actual use hit 163.25 billion U.S. dollars, the third-highest level in nearly a decade, according to China's National Development and Reform Commission (NDRC), the country's top economic planner, on March 22.
The strategic refinement of investment structures towards high-tech and manufacturing sectors also signals China's ambition to spearhead advanced global industries. In 2023, the proportion of foreign investment in high-tech and manufacturing industries stood at 37.4 and 27.9 percent, up by 1.3 and 1.6 percentage points, respectively, from that in 2022.
Officials, including Wu Hao of the NDRC, emphasize China's unmatched market potential, fostering an environment ripe for innovation and consumption upgrades.
"China is a super-large market with the greatest growth potential in the world, and will continue to unleash huge demand in advanced manufacturing, new urbanization, and consumption upgrading," said Wu Hao, an official with the NDRC.
Innovative Policies: Laying the Foundation for Global Synergy
China's proactive measures, from the "Invest in China" campaign to the introduction of an action plan featuring 24 strategic initiatives, aim to dismantle barriers and catalyze foreign investment. These efforts, combined with the tangible success in resolving over 600 concerns raised by foreign businesses, manifest China's resolve to ensure a seamless and rewarding investment experience.
To help foreign investors better understand its business environment, China launched the "Invest in China" campaign to provide better policy interpretation for investors, facilitate their exchanges with local governments, and encourage them to invest in the country through a series of activities.
At its first signature event March 26, Chinese Vice President Han Zheng delivered a keynote speech to 140 entrepreneurs and business representatives from 17 countries and regions.
"China has formed sound fundamentals in its long-term development, and will continue to unleash its market potential, improve its industrial system, and optimize the business environment," Han said.
Beyond that, a roundtable meeting system for foreign-funded enterprises was set up by the country's commerce ministry last year to listen to foreign investors' appeals and respond to their concerns.
A total of 17 roundtable meetings have been held by now, with more than 600 issues brought forth by foreign enterprises successfully solved, said Zhu Bing, an official with the commerce ministry at a press conference on March 20.
Does anyone know what these issues are? We're thinking about doing a special edition to see the interaction between foreign firms and local officials on policymaking and business environment optimization.
If you have any clues, please let us know.
Charting the Future: A Commitment to Mutual Growth
As the landscape evolves, China's unwavering dedication to creating a harmonious business environment for foreign investors stands as a testament to its global vision. The significant uptick in new foreign-invested firms attests to the confidence in China's trajectory towards becoming a linchpin of global economic prosperity.
On March 19, China issued an action plan to further attract and utilize foreign investment, proposing 24 measures across five aspects, such as expanding market access, facilitating the flow of innovation factors, as well as better aligning domestic rules with high-standard international economic and trade rules.
More detailed measures include:
Shortening the negative list for foreign investment, and launching pilot programs to relax foreign entry thresholds in scientific and technological innovation.
Expanding access of foreign financial institutions to the banking and insurance sectors, and expanding the business scope of foreign financial institutions participating in the domestic bond market.
Expanding the Catalogue of Encouraged Industries for Foreign Investment and the list of key foreign-funded projects.
Supporting data flow between foreign-funded enterprises and their headquarters, facilitating international business personnel exchanges, and improving the management of work and residence permits for foreign nationals.
As positive factors accumulate, more foreign companies are betting on China's future. Latest data from the NDRC shows that more than 7,160 new foreign-invested firms were set up across China during the first two months of this year, a 34.9 percent increase year-on-year.
"We believe that for multinational companies, to invest in China is to win the future," said Wu.
Written by Oli_Bai