Zhinews of Shenzhen Satellite TV:
Last year, China saw a decline in actual foreign investment utilization, raising concerns about the confidence and outlook of some foreign enterprises in the country. How should we interpret this situation? What policies and measures will be implemented this year to attract foreign investment? Thank you.
Huang Shouhong:
From a data perspective, there was a decline in the actual utilization of foreign investment last year. Short-term fluctuations are normal and result from various factors, including many elements that are incidental or only last for a certain period. In addressing this issue, the focus should be on assessing the overall trend and trajectory.
Last year, according to data from the United Nations Conference on Trade and Development, global foreign direct investment (FDI) declined by 18% after excluding the rapid growth of FDI intermediaries. At the same time, countries worldwide are intensifying their efforts to attract investment, resulting in increased competition in this area. Last year, China's growth in attracting foreign investment decreased by 8% when denominated in RMB. However, the overall size remains relatively big, considering both horizontal and vertical comparisons. Vertically, China is currently at its third-highest level, slightly lower than in 2021 and 2022. Horizontally, China continues to rank first among developing countries in attracting foreign investment, with its share of global FDI exceeding 10% and remaining relatively stable.
Of course, attracting foreign investment faces some disruptive factors, and there are indeed some noteworthy new situations and issues to consider. However, it's important to note that investors are rational and focus on medium and long-term returns. According to statistics from relevant authorities, foreign investors who have invested and operated in China in recent years have enjoyed a direct investment return rate of around 9%, which is relatively high internationally. Therefore, China remains globally attractive for foreign investment. With China's vast market and immense potential, many technologies get adopted and promoted quickly here once brought in, including new ones in the field of digital economy. With over a billion smartphone and internet users in China, any new technology introduced here can be promoted quickly. The investment potential and opportunities in China are enormous, which is why foreign investors maintain a high level of enthusiasm for investing in the country. Recent surveys by some foreign chambers of commerce have shown that the vast majority of companies investing in China have no plans to reduce their investments, with a high proportion continuing to regard China as their top or one of their top three global investment destinations.
The government work report outlines several key measures to attract foreign investment. First, it emphasizes the steady expansion of institutional openness. Second, it underscores the ongoing efforts to relax market access for foreign investment. Over the years, the negative list for foreign investment access have consistently shortened. In 2013, the first version of the negative list contained 190 items, but the current nationwide version has been reduced to 31, and the version for free trade zones to 27. This year's report proposes abolishing all restrictions on foreign investment in the manufacturing sector. Market access restrictions will also be reduced in services sectors such as telecommunications and healthcare. Additionally, it stresses the need to regularly remove policy measures that undermine fair competition between domestic and foreign enterprises. Third, it emphasizes strengthening services for foreign investors, including the need to make China a favored investment destination and facilitate easier work, study and travel for foreign nationals in China. Thank you.
