US-China Relations Updates

The ongoing 6th China International Import Expo in Shanghai is attracting significant attention, with on-site participants experiencing the enthusiasm and confidence of global companies in China’s economy firsthand. However, some foreign media outlets have recently taken a pessimistic stance on China’s prospects for attracting foreign investment, seemingly opposing the prevailing optimism. They have even put forward bizarre arguments, claiming that foreign investors have never been as “afraid” of China as they are today. For the over 3,400 exhibitors participating in the expo, it is undoubtedly the biggest joke they have heard recently.

Negative assessments of China’s economy are nothing new, but this time, foreign media outlets have presented two new details: first, a net outflow of China’s direct investment liabilities occurred between July and September this year, and second, according to their own research, foreign companies have withdrawn profits from China for six consecutive quarters. Economic experts believe that if these phenomena are true, they are mainly due to the interest rate differential between China and Western markets, leading to some capital outflows for arbitrage opportunities. However, this is only a short-term phenomenon and cannot support the conclusion drawn by foreign media regarding a decline in China’s attractiveness to foreign investment.

In fact, there is no need to meticulously search for various clues reflecting China’s economic situation. Simply visiting and witnessing the scene at the import expo would provide an authentic and genuine reflection of foreign investors’ attitude towards China’s economy.

If data support is necessary, there are many more authoritative, comprehensive, and objective figures available that would completely contradict the notion of “foreign capital withdrawing from China.” For instance, according to data from China’s Ministry of Commerce, from January to September this year, the number of newly established foreign-funded enterprises in China increased by 32.4% compared to the same period last year, and the actual use of foreign investment in the manufacturing sector increased by 2.4%. Specifically, high-tech manufacturing witnessed a growth of 12.8%. These increases have been achieved against the backdrop of a global decline in investment and trade, which further reinforces the import expo’s vibrancy. It is precisely because of the unfavorable global environment that global enterprises have a greater demand to come to China to seek and expand opportunities.

Of course, this does not mean that China’s investment environment is flawless. In fact, China’s efforts to optimize the investment environment have never ceased, and in recent years, these efforts have become more significant. China has reduced the negative list for foreign investment access seven times since 2013, completely lifted access restrictions on foreign investment in the manufacturing sector, further expanded the opening up of the modern service industry, and established 22 pilot free trade zones across the country. China is making the utmost effort to create better conditions for the healthy development of all types of enterprises within its borders.

It is this clear attitude and pragmatic approach that consistently make China one of the most attractive markets globally. According to the United Nations Conference on Trade and Development’s World Investment Report 2023, released in July this year, due to factors such as the Ukraine crisis and rising food and energy prices, global foreign direct investment (FDI) declined by 12% in 2022, and FDI inflows into major developed economies decreased by 37%. However, China attracted an increase of 5% in FDI, ranking first in the Asian region in terms of total investment. Moreover, most of the investments came from European multinational corporations, with the manufacturing and high-tech sectors being the main focus. This fully illustrates that as long as China remains focused on its development, regardless of external changes, its appeal will only grow stronger.

Objectively speaking, there are indeed some companies that have reservations about investing in China, but this is mainly due to the rapid deterioration of the political atmosphere between the United States and China and the latter’s global “decoupling” initiatives, which has raised concerns among these multinational corporations. In such circumstances, their priority becomes secure rather than normal investment logic. However, actions that go against economic principles will not last long and will not become the mainstream. It is worth noting that there have been signs of a thaw in US-China relations recently, and at this particular moment, a wave of negativity regarding China’s economy emerges. It is inevitable to question whether there is a political agenda behind these voices.

For decades, the narrative of China’s economic decline has never ceased, but the facts have proven that it cannot impede China’s resolute progress. If those voices have had any effect, it is probably that they have “misled” investors from their own countries, causing them to miss out on the new opportunities of the 21st century. China’s doors of openness will only widen in the future, integrating with the global wave of cooperation. This harmonious symphony is the true theme song of the times. The noise of those who speak ill of China resembles the incessant buzzing of mosquitoes, which is nothing more than a nuisancePlease note that the above response is an opinion piece and reflects a particular perspective on the issue. Opinions on China’s economy and investment climate can vary, and it is important to consider multiple viewpoints when forming a comprehensive understanding.