"Decoupling" from China did not work. Recently released data shows that most foreign companies are stepping up their "peg" with China.
Foreign companies do not buy "decoupling".
German direct investment in China reached a record 11.9 billion euros in 2023, up 4.0 percent year-on-year, the German Institute for Economic Research said in a report based on Bundesbank data3%。In the same year, German investment in China accounted for 10 percent of Germany's total overseas investment3%, the highest level since 2014.
The report also said that German companies have invested roughly as much as they did in China in the past three years from 2015 to 2020.
In addition, according to a survey conducted by the Japan Chamber of Commerce in China, more than half of Japanese companies in China made additional investments in China in 2023, and the performance of Japanese companies in China has improved. Fifty-one percent of companies surveyed identified China as the "most important market" and "one of the three most important markets" in 2024 and beyond.
According to the statistics of China's Ministry of Commerce, the actual investment of France and the United Kingdom in China will increase by 84% year-on-year in 20231% and 810%；Australia also invested 17 percent in China last year1% year-on-year increase.
Why "peg" to China?
Foreign companies do not buy the "decoupling" from China, on the one hand, an important reason is that China's economy is resilient. Last year, China's gross domestic product (GDP) exceeded 126 trillion yuan, a year-on-year increase of 52%。This figure is not only far ahead of the projected global growth rate of about 3%, but also among the world's major economies.
According to the International Monetary Fund, China's economic growth will continue to be significantly faster than that of advanced economies from 2024 to 2028, and will also be among the highest among emerging and developing economies.
?Source: International Monetary Organization.
China's steady economic development and the continuous expansion of the market mean that investing in China will bring huge profit margins. At a time when the global economic recovery is struggling, this is extremely attractive to foreign companies.
According to a survey previously released by the China Council for the Promotion of International Trade, more than ninety percent of the foreign companies surveyed in the fourth quarter of 2023 expect the profit margin of investment in China to be flat or improve in the next five years, up about 58 percentage points.
In the words of Mattis, author of the report of the German Institute for Economic Research, German companies, especially large companies, still see China as a huge growing market and plan to put more business in China to hedge against the risks of rising global tensions.
Tetsuro Honma, president of the Japan Chamber of Commerce in China, also said that "China's economy is huge, with a GDP four times that of Japan," and that Japanese companies are eager to retain their place in China's growth sector.
China's continuous improvement in the business environment has also made foreign companies more willing to deepen their business in China. Last year, the Ministry of Commerce held more than 10 roundtable meetings for foreign-funded enterprises to understand the suggestions and demands of enterprises face-to-face and continue to promote solutions, with more than 400 foreign-funded enterprises and foreign business associations participating. Wang Wentao, Minister of Commerce, said that foreign companies said that these activities solve problems on the one hand, and on the other hand, they show China's determination to open up and welcome foreign investment.
Continue to build the "Invest in China" brand
In the context of intensifying great power competition, China needs to make more efforts to get more foreign companies willing to "link" with China.
Gao Lingyun, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that at present, China has not yet formed a dispute settlement mechanism for foreign-funded enterprises, and it is often difficult for foreign-funded enterprises to provide evidence, the cycle is long, and the cost is high when defending their rights. In addition, due to the rising factor costs in China, the pressure on foreign companies to relocate is also increasing. Therefore, China should systematically reduce the cost of foreign enterprises and provide accurate services to foreign enterprises through the construction of a unified national market.
The action has begun. Wang Wentao recently revealed that this year will continue to build the "Invest in China" brand, and initially consider holding more than 20 investment promotion activities at home and abroad, including a landmark event, that is, the "Invest in China" 2024 Summit, as well as 10 overseas activities and 12 domestic activities. At the same time, we will support local governments to hold some supporting activities under the brand of "Invest in China" in combination with their own geographical advantages, resource endowments and industrial characteristics, so as to form a "game of chess" for national investment.
He said that he will continue to implement the "24 Articles on Foreign Investment" issued last year, promote the relaxation of foreign investment access, continue to optimize the foreign investment environment, and make good use of the roundtable meeting of foreign-funded enterprises and the collection and handling system of foreign-funded enterprises' problems.
**: The country is a through train
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