Kunpeng Project
Foreign capital is not coming? What's the truth behind the data? In-depth analysis, understand one or two
The Ministry of Commerce (MOFCOM) released the latest data on foreign investment in January this year, and the total actual use of foreign investment in China was 1,127100 million yuan, down 117%γ
Some friends may be sensitive to these figures, and they will immediately remember that last year's total utilization of foreign capital in China was 113 trillion yuan, also down 8% year-on-year compared with the previous year.
Last year's whole year**, this year's January continued**, and the decline increased, didn't foreign capital arrive?
It's easy to be misled if we look at only a small part of the data, but that's not the case; On the contrary, foreign investment is entering the Chinese market at an accelerated pace.
From last year to this year, the amount of utilised FDI has been declining year by year, mainly because of the high annual base.
In 2022, China's actual utilization of foreign capital reached 12 trillion yuan, the highest in the past 10 years. 2021 was not bad either, reaching 115 trillion RMB. That said, both 2021 and 2022 are slightly higher than in 2023.
However, if we go back further, both 2020 and previous years were less than $100 billion. The most impressive growth rate in the last 10 years was in 2021, with an increase of 149%γ
So, while the numbers for 2023 are declining year over year, they are still higher than any year before 2020. The overall trend over the past 10 years has remained upward.
Why has the volume of foreign investment increased so much in recent years?
From 2021 to 2022, there was a significant increase in foreign capital inflows into the country, which is also related to the over-issuance of currencies in countries such as Europe and the United States in response to the pandemic.
During the pandemic, countries such as Europe and the United States implemented large-scale quantitative easing, which led to a sharp increase in the amount of money.
The monetary side of these over-issued coins made their choices because they were optimistic about our country's political response to the epidemic at the time, as well as our country's long-term development potential, so a large amount of money flowed into our country.
However, throughout 2023, the global FDI environment has been even harsher, with a larger decline compared to previous years.
Factors such as slowing global economic growth, rising protectionism, and geopolitical risks have had a negative impact on the global foreign investment environment. Under such circumstances, China's foreign capital inflow has also been affected to a certain extent.
In response to the changes in the global foreign investment environment, China has taken a series of measures to attract foreign investment. For example, making market access more flexible, strengthening intellectual property protection, and optimizing the business environment.
In addition, China is actively promoting the construction of free ** pilot zones to provide a more convenient investment environment for foreign investors.
In fact, there is one more data that leads to more optimistic conclusions.
For the whole of last year, the number of foreign-invested start-ups in China increased by 39 percent compared to the previous year7%γIn January this year, the number of foreign-invested start-ups continued to grow by 74 percent compared to the previous year4%, a large increase.
In addition, foreign investors have been increasingly buying renminbi bonds since September last year, and have been net buyers for five consecutive months as of January this year.
It is clear that foreign investment is continuing to enter our country and participate in the future growth of our economy.
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