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How to restart China’s economy after the epidemic is an important topic. After three years of the epidemic, the biggest change that the Chinese people feel is that the economy has begun to decline significantly. Many friends around the author have complained about unemployment and fear of housing loans, because many friends have already found themselves in the dilemma of making ends meet or borrowing debts to maintain themselves. In Shanghai, advertisements for “prosperous shops for rent” can be seen everywhere in the street shops in the core areas of the first-tier cities, which were hard to find before. This has been a phenomenon that has continued to appear in the past four years. Faced with the temptation of commodity consumption, people tend to wait and see, live within their means, and actively save to deal with possible risks. In the case of insufficient domestic consumption, it is particularly necessary to attract foreign investment and enhance foreign investment’s confidence and positive expectations in the Chinese market.
Foreign capital is of great significance to China, and it essentially determines the quality and process of China’s integration into globalization. From the White Swan Hotel (the first five-star hotel in China jointly built by Huo Yingdong and the Guangdong Provincial Government in 1983) that first stood on the sandy surface of the Pearl River in Guangzhou to the row upon row of properties and shopping malls built by several major Hong Kong families in Pudong and the Bund streets , and then to Foxconn, Apple, KFC, Starbucks, Tesla, etc., China’s reform and opening up is accompanied by the spread of business culture and the enlightenment of management concepts brought by foreign capital, accompanied by employment, taxation, and regional economic growth. wait. Foreign capital has played an important role in China’s nearly half century of reform and opening up. Although some foreign investors are dissatisfied with China’s business environment, and even publicly criticized intellectual property rights and the Chinese government’s governance environment (such as the report of the American Chamber of Commerce in China), China’s open market environment still has a permanent attraction for international capital. .
However, the three-year outbreak of the epidemic is a watershed for foreign investment in China (of course, it is also a watershed for Chinese capital to invest abroad). There has been a large number of withdrawals of foreign capital. They evacuated one after another, leaving the building empty. Naturally, there is competition from emerging investment destinations such as Vietnam, Thailand, Malaysia, and India, but the decision to “divestment” is more strategic and more difficult than investment. No matter how it is explained, the biggest motivation for foreign capital to withdraw from China is that the Chinese market cannot make money, and many things that vote with their feet do not need to be explained, especially for shrewd multinational entrepreneurs.
The epidemic in China has indeed become a watershed in the relationship between foreign capital and China. The direct consequence of the large outflow of foreign capital is a sharp reduction in jobs, and employment is the foundation of people’s livelihood. Once long-term unemployment brings not only social risks, but also people’s negative evaluation of national development expectations. The multinational companies that can make direct investment in China are basically the leading enterprises in the home country. The demonstration and linkage effects brought about by the divestment of such enterprises are long-term, and some are even irreversible. China’s current economy has entered a low-speed growth cycle, and foreign investment is of great significance to the revival of China’s economy and the continued promotion of reform and opening up.
This year, the mainstream media and the national “two sessions”, an annual political event, are very concerned about the issue of foreign investment, and have suggested how to promote the work of stabilizing foreign investment.
On March 6, during the period of the “two sessions”, the well-known Chinese magazine “Finance and Economics” used “New Deal to Stabilize Foreign Investment” as the cover theme of the issue. This is reflected in Sun Yingni’s “China’s frequent new policies to attract foreign investment, how can foreign companies regain their confidence in investing in China?” “. The paper proposes that after 40 years of gradual policy opening, China has conditionally turned to institutional opening. Institutional opening tools such as the rule of law and management standards are conducive to the establishment of a transparent, stable and long-term predictable open system, and revive the confidence of foreign companies in investment and development. Some of these views are specially marked in blue (WeChat communication version). These blue views are summarized as follows: In recent years, the huge potential of China’s consumer market has created a strong attraction for foreign-funded enterprises; entering 2023, the epidemic prevention and control measures will be optimized, China will go all out to fight for the economy, and some foreign capital will begin to increase their presence in the Chinese market ; In recent years, the huge potential of China’s consumer market has produced a strong attraction for foreign-funded enterprises; not only the central level, but also the local level have increased their efforts to attract foreign investment; “Finance” reporters noticed that, in fact, on the eve of the “two sessions” of the country, ” “Stabilizing foreign investment” has become a hot topic of discussion among delegates; many interviewed executives of multinational companies said that as the only country in the world that has the most complete industrial categories in the United Nations industrial classification, China’s industrial chain and supply chain advantages are still difficult to replace ; more importantly, foreign-funded enterprises are unwilling to give up China’s huge market; in the adjustment of China’s industrial structure, the manufacturing industry is the top priority of transformation and upgrading. At present, China is accelerating its layout in attracting foreign investment in the manufacturing industry; ” According to the information sorted out by the reporter of Caijing, many foreign-funded enterprises are settling down across the country in the fields of elderly care, medical and health services, etc. It also involves some comments on the industrial transfer of foreign-funded enterprises, and at the end it ends with “With the introduction of new foreign investment policies one after another, enhancing foreign investment confidence and expectations will become the highlight of government departments at all levels”.
In addition, the Department of Foreign Investment under the Ministry of Commerce, which is responsible for China’s foreign investment promotion and foreign investment statistics, wrote in the article “How will greater efforts be made to attract and utilize foreign investment in 2023?” “Discussed that China’s current absorption of foreign investment mainly has the following four favorable factors: China’s economic growth prospects are improving; the “magnetic attraction” of foreign investment in the Chinese market continues to increase; policy superposition effects continue to appear; cross-border exchanges are more convenient.
In terms of incremental expansion: (1) the Ministry of Commerce will promote the reasonable reduction of the negative list of foreign investment access; (2) increase the opening up of the modern service industry; (3) rely on major economic and trade exhibitions and various investment promotion mechanisms; (4) ) To support the combination of “going out” and “inviting in” in various regions to carry out investment promotion activities; (5) To promote the construction of more landmark projects with foreign capital.
In terms of stable stock: (1) the Ministry of Commerce will continue to play the role of the special team for key foreign investment projects in the foreign trade and foreign investment coordination mechanism; (2) strengthen the normalized exchanges with foreign-funded enterprises and foreign business associations; (4) Implement the national treatment for foreign-funded enterprises; (5) Improve the inter-departmental coordination mechanism for foreign-funded enterprises at all levels to complain; (6) Protect the rights and interests of foreign investment in accordance with the law; (7) Make the existing foreign-funded enterprises operate and develop well .
In terms of quality improvement: (1) The Ministry of Commerce will do a good job in a series of foreign investment promotion and implementation to promote the detailed supporting measures of various local departments; (2) Actively guide foreign investment in advanced manufacturing, modern services, energy conservation and environmental protection, technological innovation, etc. (3) Continue to increase the foundation of cooperation and industry leadership, and continuously improve the quality and level of investment.
These two publicity matrices basically show China’s measures to attract foreign investment in 2023 and the subdivision direction of the next work. “National Treatment”, “continuously improving the quality and level of investment”, etc. At the same time, as always, they are optimistic about China’s market factors, believing that China has a wide range of consumption capabilities, and foreign capital will be attracted. We must understand that a basic reality is that the traditional path of globalization is undergoing historic and profound changes. Major countries and regions, including the United States and Europe, have seen extensive economic nationalism. The core of this nationalism is to promote Capital investment in the country, rethinking long-term “outsourcing policy” to broaden domestic employment. In the United States, this is manifested as promoting the return of multinational companies to their homeland, promoting “re-industrialization”, and implementing huge subsidies (multinational companies can enjoy corresponding subsidies if they produce locally); in Europe, the European Union also gives huge subsidies to companies; in South Korea, Japan China, Taiwan and other places that are good at manufacturing semiconductors face strict restrictions on their investment in China and political lobbying from the United States, requiring them to go to the United States to set up factories, avoid the Chinese market, or eliminate the possibility of certain types of products being produced in China.
Countries all over the world are increasingly scrambling for multinational corporations, even resorting to political lobbying, threats, subsidies and incentives, and matching methods. Realistically, to attract international direct investment, first, we must sacrifice real money and take practical actions. China’s international investment promotion, especially for investments worth billions of dollars or more, must provide a certain amount of financial subsidies. After all, if China does not give it, then other countries will. Make good use of the weapon of subsidies to make foreign-funded enterprises feel profitable And reduce costs, this is China’s greatest sincerity. The United States and Europe do this. If China does not do this, it may be difficult to attract investment. Second, high-level government officials need to show a friendly attitude towards foreign businessmen. This may involve members of the Central Committee down to the county-level governments. Whenever possible, we will use every opportunity to develop economic diplomacy, make good use of social capital expanded in various occasions, and attract foreign investment; For foreign investment in the field of national security, trust and support must be given after security review. Dealing with foreign capital itself is an important way to train and train cadres to participate in globalization, and it is an important manifestation of cadres’ ability to take on tasks. We can consider making foreign investment promotion one of the references for the promotion of county-level cadres. Third, China needs to formulate new normative guidance. For example, the carbon tariffs currently in force in the European Union require companies investing in Europe to adapt and obey. Does the Chinese government have the ability to lead regional or global business norms? This is worth designing. Fourth, China needs core and leading technologies to attract foreign capital to invest. Whether it is venture capital or targeting new unicorn companies, after all, a pure market is only a necessary but not sufficient condition for attracting high-tech companies to settle in. This truth has been repeatedly proven. With regard to the environment and the most important high-tech elements, China’s independent choice authority will be more sufficient and more active. Fifth, seek truth from facts. In the statistics, how much foreign investors have invested is based on the actual funds that have been put in place, so as to avoid gimmicks and falsehoods, waste of resources, and misleading decision-making. Sixth, weaken the excessive publicity of the inevitability of the Chinese market and foreign investment, and strengthen the key publicity of the improvement of the business environment, China’s factor advantages and government support. Here is an example of the promotion of the US Department of Commerce in the US “Select USA”. The “Select USA” official website lists the advantages of foreign-funded enterprises investing in the United States, including: the United States is the world‘s largest market and has a sound market economy; the United States is the center of global innovation; a convenient business environment; high-quality labor ; Abundant resources; Perfect finance. In other words, the promotion of population and consumption capacity needs to match other competitive factors. Since direct investment is often a strategic investment, market demand can also be fully met through foreign trade channels, and the key to stabilizing direct investment is to allow enterprises to obtain positive returns Anticipate rather than blindly promote the size of the market. After all, a large number of people cannot be equated with a large market. For example, Russia, Mexico, and Indonesia all have large populations, but are still on the fringes of global direct investment. No matter how big the market is, it does not necessarily directly lead to the profitability of multinational companies. What China really needs to do now is to let multinational companies see the sincerity, goodwill and pro-business attitude of governments at all levels, as well as practical means to promote the optimization of the business environment. In the more competitive and “introverted” global investment market, China’s economic and political marketing to its own market must be precise.
Looking at it this way, China needs to take a long way to go and adjust strategies if it wants to effectively attract investment from multinational companies!
(Note: Wang Yingliang, Chief Writer of China Development International Affairs (NEIA) Research Workshop, mainly researches industrial investment and national competition, WeChat account porsche910114. This article only represents the author’s personal opinion. Editor’s email [email protected])