Despite a global atmosphere of subdued investment sentiment, China continues to hold significant appeal for multinational corporations, thanks to its robust domestic market and unwavering commitment to economic openness. Analysts and leaders of foreign chambers of commerce in China highlighted this during various events at the 2023 China International Fair for Trade in Services (CIFTIS) in Beijing.
They pointed out a notable shift in the inflow of foreign investments into China, emphasizing a transition from quantity to quality. This shift aligns with China’s pursuit of high-quality development, which aims to create growth opportunities in sectors like trade in services and high-end manufacturing.
Jens Hildebrandt, Executive Director of the German Chamber of Commerce in China (North China), expressed confidence in China’s long-term economic growth, despite geopolitical tensions impacting global business confidence. He highlighted the evolution of the cooperation model between China and Germany, where China’s strong brands and high-end technologies are now making significant inroads into both markets, particularly in decarbonization and healthcare sectors. As China opens its services industry further, German companies are expected to gain increased access to the Chinese market.
Amid a sluggish global economy and tepid cross-border investments, China has ramped up efforts to attract foreign investments, introducing 24 targeted policy measures in August to ensure foreign businesses receive equal treatment, enhanced fiscal support, and tax incentives. Loh Wee Keng, Chairman of the Malaysian Chamber of Commerce and Industry in China, believes these policies will boost multinational corporations’ confidence in conducting long-term operations in China and revitalize global cross-border investments.
As China’s traditional advantages like low labor and rental costs diminish, some foreign manufacturers, especially those in low-value-added industries, have exited the market. However, high-tech companies are eagerly entering China to seize opportunities associated with industrial upgrading, according to Nie Pingxiang, a research fellow at the Chinese Academy of International Trade and Economic Cooperation.
Despite a 4% year-on-year drop in foreign direct investment (FDI) in the Chinese mainland in the first seven months of the year, newly established foreign-invested enterprises increased by 34% during the same period, with FDI in high-tech and high-end manufacturing growing 3.8% and 25.3%, respectively.
Roberta Lipson, Vice-Chair of the American Chamber of Commerce in China, expressed confidence that recent high-level interactions between Chinese and U.S. government officials will boost trust among U.S. companies in China, with many seeing China as a critical investment destination due to its growth potential.
Geraldine McCafferty, Deputy Head of Mission at the British embassy in Beijing, rejected the notion of “decoupling” and stressed the benefits of international trade for global prosperity. She believes that closer business ties will further enhance both the Chinese and British economies, especially in the services sector.
Zhao Ping, Dean of the Academy of China Council for the Promotion of International Trade, emphasized that an improved business environment in China will enhance innovation and create opportunities for multinationals to participate in the country’s opening-up and innovation initiatives.
Ilham Kadri, CEO of Belgian chemical manufacturer Solvay SA, highlighted China’s strategic importance in the company’s global strategy and expressed the willingness to increase investment to meet the country’s demand. The company’s new research and development facility in Shanghai aims to drive breakthroughs in critical sectors, including hydrogen, electronics, and semiconductors.
In summary, China’s allure for foreign businesses remains strong, driven by its commitment to quality development, economic policies, and opportunities in emerging sectors, making it an essential destination for global investment.