Why does China attract more foreign investment than any other country? Three factors deserve attention

According to the report Global Investment Trends Monitoring released by the United Nations Conference on Trade and Development (UNCTAD) in January this year, China will surpass the United States in absorbing foreign investment in 2020 and become the world's largest foreign investment destination. According to data released by the Ministry of Commerce recently, the actual use of foreign capital in China maintained a momentum of growth in the first quarter, up 39.9% year-on-year and 24.8% compared with the same period in 2019.

Given the continuous spread of COVID-19, the slow recovery of the world economy and the apparent lack of confidence of international investors, how did China's foreign investment increase? There are at least three concerns.

First of all, in the short term, China has taken decisive measures to deal with the epidemic and promote the resumption of work and production. This has made China the first major economy to resume growth and become a "safe haven" and "safe island" for global capital.

As early as last October, International Monetary Fund Managing Director Georgieva said that the global economy faces uneven growth prospects due to the different policy responses of different economies to the epidemic. Practice shows that epidemic prevention and control is a key factor for economic recovery. The US, India and other countries have learned a profound lesson in this regard, as an old saying goes, "If we do not fight the epidemic resolutely, we will not fight the epidemic resolutely." In the face of the sudden outbreak, China has taken resolute and resolute measures to stop the spread of the epidemic. We have focused on the prevention and control of the epidemic and the resumption of work and production at the same time. We have quickly regained our footing. In addition, China has completed the task of poverty alleviation and is in sight of completing the building of a moderately prosperous society in all respects. We have successfully formulated the 14th Five-Year Plan and the outline of long-term goals for the year 2035. China's appeal to global capital, by contrast, is extraordinary.

Secondly, in the medium and long run, China's economic policies are stable and its growth potential is huge. Foreign investors are full of confidence in China's future development and their investment in China continues to grow steadily.

In the past few years, China's overall advantage in attracting foreign investment has not changed, despite the complex and severe external environment facing its development and the intensified competition in international investment. In particular, the Chinese economy has maintained a sound momentum of overall stability and progress, and the huge potential of the domestic market is being gradually unleashed.

According to the data of foreign direct investment released by UNCTAD in recent years, China attracted 139 billion US dollars of foreign investment in 2016 and 163 billion US dollars in 2020, showing a steady upward trend without major fluctuations. This fully reflects the growing confidence of foreign investors in China and the increasing competitiveness of China in attracting foreign investment. Surveys by numerous foreign chambers of commerce in China also show that China remains an important investment destination for foreign investors.

Third, China's opening-up has never stopped. In recent years, China's market access has been loosened and its business environment has been improved. For example, the new Catalogue of Industries EncouragedForeign Investment, which came into effect in January this year, has further expanded the scope of foreign investment. The General Office of the State Council recently issued the Opinions on Further Doing a Good Job in the Reform of "Six Stable Services" and "Six Guarantee Services" to continuously optimize the environment for foreign investment. At the Boao Forum for Asia Annual Conference 2021, many participants expressed their full confidence in the Chinese market for the continuous improvement and optimization of the business environment in China. I believe that with the implementation of all measures to further open up, China will become more attractive to foreign investment and the advantages of its huge market size will become more apparent.