China’s Ministry of Commerce Optimizes Foreign Investment Structure
In response to recent fluctuations in the scale of foreign investment attracted by China and the external hype of “foreign investment leaving China,” Zhu Bing, director of the Department of Foreign Investment Management of the Ministry of Commerce, addressed the issue in a recent interview.
Zhu Bing said that there are fluctuations in the scale of foreign investment in China, which align with market laws. He pointed out that while some multinational companies have adjusted their production layout globally and reduced the scale of investment or business in China, the reasons behind these changes vary.
One reason for these adjustments is the gradient transfer of labor-intensive enterprises. Rising domestic labor and land costs have led some cost-sensitive and labor-intensive companies to adjust their layout and transfer production capacity globally based on development strategies and comparative advantages of each country.
Another reason for the reduction in foreign investment is the weakening of competitive advantages. As the technological level and production capacity of Chinese domestic enterprises has improved, foreign-funded enterprises have faced increasingly fierce market competition, leading to some choosing to gradually withdraw from the Chinese market.
Zhu Bing also highlighted investment transformation and upgrading as a reason for reduced foreign investment. Many foreign-funded enterprises have adjusted their investment layout in China to follow the trend of domestic industrial upgrading, for example by closing or moving production lines for some products and expanding investment in R&D centers.
Despite these challenges, the scale of China’s foreign investment attraction remains at a historically high level, with the structure of attracting foreign investment continuing to be optimized. In the first 11 months of 2023, the scale of investment in high-tech industries reached 386.65 billion yuan, accounting for 37.2% of the country’s total foreign investment.
Zhu Bing emphasized that the positive changes in the investment structure reflect the effectiveness of policies such as the country’s introduction of an industrial catalog to encourage foreign investment and support for the development of foreign R&D centers. Local governments are also increasing efforts to attract foreign investment and introduce high-tech quality foreign investment.
The Ministry of Commerce’s focus on optimizing China’s structure for attracting foreign investment signals the country’s commitment to maintaining a favorable investment environment for multinational companies.