China Attracts Record High Foreign Direct Investment in 2022, Despite Global Decline
Xinhua News Agency, Geneva, July 8 (Reporter Chen Binjie) – The United Nations Conference on Trade and Development (UNCTAD) recently released the “World Investment Report 2023,” revealing that China’s foreign direct investment (FDI) has reached a record high. The report states that China’s FDI will increase by 5% in 2022, reaching $189.1 billion. This is remarkable considering the global decline in FDI, which is expected to drop by 12% to $1.3 trillion due to various factors such as the Ukraine crisis, rising food and energy prices, and increasing public debt.
Analysts have emphasized the significance of China’s steady growth in FDI amidst multiple challenges faced by the global economy, highlighting that it reflects the world‘s vote of confidence in China’s economy.
The report shows that FDI inflows to developed economies will fall by 37% to $378 billion in 2022. In contrast, FDI inflows to developing countries, including China, are projected to increase by 4% to $916 billion. Among developing countries, China remains a stable and attractive destination for FDI, attracting a significant portion of the inflows. China’s FDI is primarily concentrated in manufacturing and high-tech industries, with the majority of investment coming from European multinational companies.
China’s continuous efforts in innovation and the development of new industries have contributed to its appeal to foreign investors. The country has implemented practical measures to promote high-quality development, creating an optimistic outlook for foreign-funded enterprises regarding the long-term prospects of the Chinese economy.
China’s strategic position as a hub for open innovation has also led to an influx of foreign R&D centers. The country’s vast market, complete industrial ecosystem, optimized business environment, and abundant talent pool have attracted multinational companies to establish their research and development bases in China.
Leaders from multinational corporations have acknowledged the importance of China’s market and its contribution to innovation. Gao Le, President and CEO of BMW Group Greater China, considers China not only the largest single market in the world but also a vital source of innovation. BMW Group has established its largest R&D center outside of Germany in China, focusing on digital systems and technologies.
Mohamed Ruta, President and CEO of Dubai Chamber of Commerce, praised China’s strong manufacturing capabilities and talent pool, emphasizing the country’s attractiveness for foreign companies. China’s comprehensive infrastructure, robust financial technology, and rapid advancements in cutting-edge technologies such as artificial intelligence and the Internet of Things make it an appealing destination for foreign investment.
Despite the global impact of the COVID-19 pandemic, China’s strong economic resilience and comprehensive supporting industries have solidified the country as a strategic market for foreign-funded enterprises. The majority of these companies continue to view China as their primary market.
Borger Brende, President of the World Economic Forum, emphasized the significance of China’s economic development to the world, noting that China has contributed over 30% to global economic growth. The measures taken by China to support economic growth have fostered positive expectations among businesspeople for post-pandemic opportunities in the Chinese market.
The New York Times recently published an article highlighting the importance of Chinese market development for German companies. BASF, the German chemical giant, views China as a vital market to effectively offset high energy costs in Europe. The chairman of BASF’s executive board, Brudermüller, stated that without China, the restructuring the company requires would be impossible.
Analysts have also identified that the global restructuring of the industrial chain is accelerating due to various factors such as the pandemic, geopolitical conflicts, and inflation. China’s steady growth in FDI signifies a recognition that arguments and practices of decoupling and breaking chains will further darken the prospects of the world economy already facing numerous challenges. Developing countries offer opportunities for companies from all nations, fostering a more efficient and orderly international industrial connection and resilient global supply chains.
WTO Director-General Iweala recognizes China’s importance in the global trading system, stating that China’s positive performance in trade benefits other countries and regions, particularly developing economies.
China’s commitment to high-level openness and attraction of foreign capital contributes to deeper and mutually beneficial cooperation between China and other countries, promoting the construction of an open global economy. Bernard de Witt, Chairman of the Belgium-China Economic and Trade Commission, affirms China’s crucial role in supporting the operation of the global industrial chain and supply chain. China’s promising economic growth prospects in 2022 are expected to further drive global economic recovery.
[Contributor: Gong Ci]