Hong Kong Bauhinia Magazine:

Global innovation capital has flowed into China with growing momentum this year. Based on the latest data, how has foreign investment in China performed overall? How do you view its prospects? Thank you.

Li Bin:

The questions will be answered by Mr. Zhao.

Zhao Yuchao:

Thank you for your questions. In recent years, China has steadily expanded high-standard opening up, using the certainty of its own development to counter the uncertainty of the external environment and offering a broad and promising market for global capital.

Foreign investment in China has generally performed well this year. Balance of payments data shows that net inflows of foreign investment of all kinds reached about $160 billion in the first five months, well above the same period last year. That figure covers direct investment and portfolio investment as well as deposits and loans from abroad. Foreign equity investment in China posted a net increase of more than $50 billion over the same five months. New capital contributions held steady, while reinvested earnings of foreign-funded enterprises in China rose 35% year on year. As of the end of the first quarter, the stock of foreign direct investment in China exceeded $4 trillion. Excluding countries and regions that function primarily as offshore centers, China still ranked second among all economies by stock of inward investment. The mix of foreign investment China attracts also continues to shift toward newer and higher-quality sectors. SAFE cross-border receipts and payments data shows that foreign capital inflows into high-tech services and high-tech manufacturing rose 61% year on year in the first half, accounting for 36% of total capital contributions, 11 percentage points more than a year earlier. The data shows that in recent years, foreign investment in China has gradually shifted from seeking the cost and scale advantages of "Made in China" toward taking part in "Created in China."

Foreign investment growth in China is expected to maintain its positive momentum, supported by several factors. First, China's industrial upgrading and technological innovation will keep creating investment opportunities and provide a more stable and attractive environment for foreign investors. Second, China's steady expansion of institutional opening up, a stronger service and support system for foreign investment and improved financial connectivity mechanisms will create a more convenient policy environment for foreign investment in China. Third, against the complex and volatile international backdrop of recent years, China's stronger economic resilience and a stable yuan will give global capital more options for diversifying its allocations.

Going forward, SAFE will work with relevant departments to systematically advance reform in foreign investment and steadily make cross-border investment and financing easier. We will also build an institutional framework suited to high-standard opening up and high-quality development, featuring sound management, concise rules, convenient procedures and clear direction. These efforts will further facilitate global capital investment in China and encourage more foreign investors to make long-term, value-oriented investments. Thank you.