Foreign Capital Is Retreating? That's Not What The Data Says

Novel coronavirus pneumonia has caused many foreign businesses to temporarily close their branches or factories in China, triggering China's withdrawal from foreign capital and China's position in the global supply chain. Is this really the case?
According to the data released by the Ministry of Commerce on July 16, the actual use of foreign capital in the first half of the year was 472.18 billion yuan, a year-on-year decrease of 1.3%, a decrease of 9.5 percentage points compared with the first quarter and 2.5 percentage points lower than that of the previous five months. Under the epidemic situation, this achievement did not come easily.
In April, China's actual use of foreign capital was 70.36 billion yuan, an increase of 11.8% over the same period of last year, which was the first time since this year that China's absorption of foreign capital achieved positive growth. Since then, China's actual use of foreign capital in May was 68.63 billion yuan, up 7.5% year on year. In June, China's actual use of foreign capital was 117 billion yuan, a year-on-year increase of 7.1%. The above data show that China's actual use of foreign capital increased significantly in the second quarter compared with the first quarter at the beginning of the epidemic. The novel coronavirus pneumonia epidemic prevention and control in China has not only failed to retreat in the first half of the year, but also has been steadily improving with the new China's epidemic prevention and control.
According to the latest data of the National Bureau of statistics, China's economy first fell and then rose in the first half of the year. In the second quarter, the economic growth turned from negative to positive. The main indicators showed a recovery. The economic operation recovered steadily. The overall market expectation was better. This will further enhance the foreign investment confidence in China.
According to a recent report released by the world bank, the epidemic situation has changed the understanding of governments and multinational companies on the global industrial chain supply chain. In the past, cost analysis was emphasized in the construction of global industrial chain supply chain system. In the future, in addition to cost analysis, the safety analysis of competitive advantage will become equally important. China has taken the lead in controlling the epidemic situation and comprehensively promoting the resumption of work and production. Undoubtedly, China is in a safer position in the global industrial chain supply chain. Foreign investment that has not included China in its product supply chain system may consider increasing its investment in China, which makes China a "safe haven" for global investment.
At the same time, with the improvement of security requirements of global industrial chain supply chain, China's huge domestic market demand will play an increasingly important role in the world supply and demand relationship. From the monthly data, the decline rate of China's total retail sales of consumer goods narrowed for four consecutive months. With the normalization of epidemic prevention and control in China, the market demand has gradually recovered, and the consumer market is in the process of rapid recovery. In this case, multinational companies that value the Chinese market will not withdraw their capital, but will increase their investment in China.
At the same time, China is committed to creating a fair, transparent and predictable business environment by deepening reform and opening up. At the beginning of this year, the "foreign investment law" and its implementation regulations officially came into effect, and the pre admission national treatment plus negative list management system was established at the level of laws and regulations, providing a stronger guarantee for the interests of foreign investors in China. In early June, the overall plan for the construction of Hainan free trade port was officially announced. Hainan free trade port implements "no ban or entry" for investors. In principle, the government will cancel the permission and approval unless there are mandatory standards and legal prohibitions. The government's record acceptance agencies fulfill their regulatory obligations through supervision during and after the event. For foreign investment, the national treatment before admission and the negative list management system for free trade port are implemented, which has truly fulfilled China's promise of "welcome investors from all over the world to invest in Hainan". At the end of June, the 2020 version of the negative list was announced as scheduled. The number of negative lists for foreign investment access in China was reduced from 40 to 33, and the negative list of foreign investment access in pilot free trade zones was reduced from 37 to 30.
China novel coronavirus pneumonia has been widely used in the global examination. The world's investors have fully perceived the resilience and vitality of China's economy and voted a vote of confidence for China's business environment and future prospects. One belt, one road, the actual investment in foreign investment increased by 7.8% and 6% in the first half of the year, respectively. In the main investment sources, the amount of foreign investment actually increased by 2.9% compared with the same period in the same area. The actual amount of foreign investment in ASEAN increased by 5.9% compared to the same period.
Many multinational companies are rapidly seizing business opportunities. Take Shanghai as an example, since this year, many foreign-funded projects have been signed and implemented in Shanghai. Air products, the world's leading supplier of industrial gases and gas making equipment, has signed a contract to increase its capital by 470 million US dollars; one of the world's largest polymer manufacturers, kestrel, this year transformed its headquarters in Shanghai from a management oriented regional headquarters to a multi-functional regional headquarters integrating investment, management, operation and R & D.
Of course, we should also see that the world economic situation is still complex and severe, and there are still many uncertain factors affecting foreign investment. It is still a long way to go to achieve the goal of stabilizing foreign investment in the whole year. Therefore, "stabilizing foreign investment" in the second half of the year will also face difficulties and challenges, which requires us to further explore China's huge market potential, stimulate innovation vitality, optimize the business environment, and further enhance and enhance the attractiveness of foreign investment.