Foreign enterprises optimistic about Chinese market

Workers inspecting new cranes in Xuzhou, Jiangsu Province on May 8, 2024./ CFP

Workers inspecting new cranes in Xuzhou, Jiangsu Province on May 8, 2024./ CFP

Editor’s note: Li Dawei is a researcher at the Academy of Macroeconomic Research of the National Development and Reform Commission (NDRC). The article reflects the author’s opinion, and not necessarily the views of CGTN. The article has been translated from Chinese and edited for brevity and clarity.

Foreign-funded enterprises are generally optimistic about the prospects of China’s economic development. Since the beginning of this year, with China’s economy continuing to rebound and improve, global multinational companies have become notably more willing to invest in China. 

According to the Ministry of Commerce, in the first quarter of 2024, there were 12,000 newly established foreign-funded enterprises, up by 20.7 percent. The first signature event of “Invest in China” attracted over 140 representatives from foreign companies and business associations, spanning 17 countries and regions. According to the China Council for the Promotion of International Trade, nearly 150 foreign institutions from 33 countries and regions registered for the Global Trade and Investment Promotion Summit 2024, indicating the widespread confidence of global business communities in China’s economic development prospects and their growing commitment to the Chinese market.

China’s utilization of foreign investment continues to see qualitative improvements. Statistics from the Ministry of Commerce showed that in 2023, the proportion of foreign investment absorbed by high-tech industries in China rose by 1.2 percentage points compared to 2022; and in the first quarter of 2024, the proportion of foreign investment in high-tech manufacturing reached 12.5 percent, a further 2.2 percentage point increase year on year. 

In recent years, many more foreign-funded enterprises have participated in building China’s advanced industrial chain and upgrading the innovation chain, extending from processing and assembly to high-value-added component manufacturing, research and development, and other aspects. Industrial chains for emerging industries such as new energy vehicles have emerged as new growth points for foreign investment. 

The year 2023 witnessed vigorous development of China’s new energy vehicle industry, with China’s automobile exports ranking first globally for the first time. In the new-energy vehicle industrial chain, large multinational companies possess technological advantages in areas like vehicle-mounted integrated circuits and electronic control systems, which is a good complement to Chinese companies’ strengths in areas like power batteries, thereby jointly contributing to the world’s most efficient green industrial chain.

A batch of new energy vehicles to be exported at the Taicang Port Terminal in Jiangsu Province on May 9, 2024. /CFP

A batch of new energy vehicles to be exported at the Taicang Port Terminal in Jiangsu Province on May 9, 2024. /CFP

Multinational corporations have various reasons for being optimistic about the Chinese market. In terms of market potential, China’s economy ranks second in the world, and the residents’ consumption structure is upgrading, serving as vital growth drivers for multinational companies. 

Regarding infrastructure, China’s ports, railways, highways, and other construction developments rank among the top in the world. The accelerated development of new transportation methods such as multimodal transportation has also provided ample convenience for multinational companies to innovate in logistics organization and enhance logistics efficiency. 

As for factor endowments, China has topped the world in the number of international patent applications based on the Patent Cooperation Treaty (PCT) for four consecutive years. In the national and regional rankings of the Nature Index reflecting global high-quality research output and collaboration, China’s contribution surpassed that of the United States for the first time in 2022, ranking first worldwide. This underscores China’s outstanding factor endowments in technology, talents, and other aspects, fostering favorable conditions for high-quality utilization of foreign investment.

The continuous optimization of the business environment is conducive to foreign-funded enterprises investing and developing in China. In recent years, China has comprehensively implemented the national treatment and negative list management system for foreign investments, continually reduced the negative list for foreign investment access, strengthened intellectual property rights protection, ensured equal treatment for foreign-funded enterprises in government procurement, bidding, and standard-setting. 

These efforts have effectively shaped a top-tier, market-oriented, internationalized, and legalized business environment, stabilizing foreign investment expectations and boosting confidence of foreign investors. With the continuous upgrading of China’s economic structure and the ongoing optimization of the business environment, multinational companies will continue to ramp up their efforts in “investing in China” and embrace new development opportunities in the more open Chinese market.