BEIJING – With global industry forecasts expected to underperform in 2023 and raise considerations about fluctuations in cross-border capital flows, China is encouraging new drivers to cement its prestige as an industry leader as well as a destination for foreign investors.
In the face of global economic fragility, guest speakers at the third episode of the China Economic Roundtable, a multimedia discussion platform organized through Xinhua News Agency, focused on how China is preparing for its industry with its global partners, in its efforts to bring the industry to life, investor confidence and the profound implications those points will have on the global industry and investment.
New Trade Drivers
In a December forecast, the United Nations Conference on Trade and Development (UNCTAD) said that the outlook for 2024 remains “highly uncertain” and “generally pessimistic,” and predicted that global trade in 2023 would fall by around 5 percent compared to the 2022 level.
Persistent geopolitical tensions, declining demand in developed countries, expanding restrictive measures in the industry, volatile raw material costs and lengthening supply chains are among the points weighing on the industry, UNCTAD warned.
In the face of those challenges, China, the world’s second-largest economy and largest producer of goods, is scrambling to tap into new industrial potential. The Central Economic Labour Conference held in December aimed to sell new drivers of foreign industry through the expansion of industry in the intermediate sectors. goods, service industry, virtual industry, and cross-border e-commerce exports.
Chinese customs data shows that the nation’s exports and imports reached 37.96 trillion yuan (about $5.35 trillion) in the first 11 months of 2023, staying flat from the same period in 2022, while exports alone hit 21.6 trillion yuan, up 0.3 percent year-on-year.
“Under such circumstances, China’s foreign industry has maintained its stability in terms of scale and export growth,” said Zhang Wei, vice president of the Chinese Academy of International Trade and Economic Cooperation at the Ministry of Commerce (MOC).
Zhang highlighted China’s exports of three primary technology-intensive green products (solar batteries, lithium-ion batteries and electric cars) that have maintained growth, and said the service industry, virtual industry, cross-border e-commerce and the intermediate goods industry are increasing.
“I think the rapid growth of these new trends reflects the fact that China’s foreign trade remains very resilient and competitive,” Zhang said.
Use of the investment
China attaches importance to foreign direct investment (FDI), given its enormous contribution to the country’s economic and social development.
Zhu Bing, director of the Foreign Investment Administration Department of the Ministry of Commerce, said China, the recently held Central Economic Work Conference, has sent a positive signal by expanding its opening-up and attracting foreign investment.
As a result of the conference, the market for foreign investment in service sectors such as telecommunications and fitness will be more relaxed. This came after the country announced in October 2023 that it would remove all restrictions on foreign investment in the production sector.
“This will stabilize the expectations of foreign investors,” Zhu said, adding that China’s assertiveness and firmness in opening up and attracting foreign investment will provide much-needed certainty in the face of the unpredictability of today’s world.
Government data shows a 10-percent decline in actual FDI into China in the first 11 months of 2023. Zhu said that despite the drop, FDI in China during the period still managed to top 1 trillion yuan and remained at a high level. “It is normal for the scale of foreign investment to fluctuate. There are various reasons for this, including both economic and non-economic factors,” Zhu explained.
He indexed points such as the effect of the COVID-19 pandemic that could have led to a lag in investment data, given the long cycle of investors’ investment decisions, geopolitics, and the overall reduction in the scale of global FDI. , which fell to $1. 3 trillion in 2022, a cut of about 12% year-on-year, according to UNCTAD data.
Optimizing the environment
During the roundtables, Zhu said stability, fairness, transparency and predictability are criteria for assessing a country’s business environment, and the Chinese government strives to offer all those criteria to investors.
“We are willing for multinational corporations and foreign small and medium-sized input enterprises to invest in China,” he said. Zhu added that cooperation between these input companies and domestic input companies is a new way for foreign investment to enter the Chinese market.
“Optimizing the business environment entails several areas, such as liberalization, facilitation, promotion and hedging of investments, for which China’s foreign investment law has set very transparent specifications and requirements,” he said.
“We do a lot to facilitate investments and approval procedures are simplified. In terms of investment promotion, local governments are also stepping up their efforts. In the post-pandemic era, crossing borders has also become easier,” he said.
As part of a recent initiative to boost foreign trade, the country began implementing a unilateral visa-free policy for passport holders from France, Germany, Italy, the Netherlands, Spain, and Malaysia, on a trial basis, starting December 1, 2023. to November. The resolution allows passport holders from the six countries to enter China visa-free for business, tourism, visiting family and friends and transit, for a period not exceeding 15 days.
During the discussion, Zhao Yugang, head of the control committee of the Shanghai Pilot Free Trade Zone, also shared the practices of the zone, which celebrated its tenth anniversary in 2023. “The Shanghai Pilot Free Trade Zone has made progress in investment control, industry facilitation, monetary innovation and transformation of government functions,” Zhao said.
Thanks to those efforts, more than 84,000 people have been registered in the Shanghai Pilot Free Trade Zone and real FDI reached 58. 6 billion U. S. dollars in the past 10 years, Zhao said.
“In terms of investment management, we have released China’s first negative list for foreign investment access and taken the lead in implementing the negative list system. In terms of trade facilitation, we have also established the nation’s first single-window platform to facilitate trade activities,” Zhao said.
Zhang Wei added that for more than forty-five years, opening-up has played a vital role in China’s economic development. “In the future, we also hope to fully play the leading role of high-level opening-up to boost the Chinese economy moving forward. “