As the global economic situation evolves, foreign capital is pouring into the Chinese market with unprecedented thoughts and approaches. Exchanges between European investors and Chinese listed companies have become more frequent, and the increased frequency of meetings reflects the desire of both sides to strengthen communication. China’s stock market has attracted the attention of international investors, reigniting enthusiasm for Chinese stocks. Some well-known investment management institutions and funds have begun to increase their holdings of Chinese stocks and bonds.
In London and Paris, the market discussions about China have significantly increased. Investors believe that Chinese stocks offer great value for money and look forward to increased shareholder returns. This confidence is not only present in Europe but also echoes positively across the Atlantic, in the United States. Bridgewater Associates, as one of the world’s largest hedge funds, has significantly increased its focus on the Chinese market and emphasized the importance of the Chinese market in constructing a global perspective and diversified investment portfolio. Bridgewater’s actual investment performance has also confirmed its positive assessment of the Chinese market.
Recent data shows that in April, hedge funds increased their holdings in Chinese stocks, and at the beginning of May, northbound capital continued to flow into the Chinese market, with a net buying amount of 10.938 billion Chinese yuan in half a day, highlighting the positive investment stance of foreign capital in the Chinese stock market. Since February, the inflow of northbound funds has been growing stronger, with three consecutive months of increases in holdings of Chinese stocks. Along with the heat of the stock market, the bond market has seen active trades, with foreign capital increasing its holdings in domestic Chinese bonds for seven consecutive months.
In terms of investment options, international investors usually have two approaches—short-term financial asset investments and long-term direct investments. China has attracted foreign capital in both areas, but the scale of direct investment inflows to China shows a declining trend, which requires attention. According to balance of payments statistics from the State Administration of Foreign Exchange, there was a decrease in foreign direct investment inflows in 2023, but by early 2024, China’s actual use of foreign capital showed signs of warming up, indicating certain cyclical fluctuations.
Global direct investment, excluding tax-advantage-seeking capital transfers through ‘conduit countries,’ has shown an obvious downward trend. According to the latest data from the United Nations Conference on Trade and Development (UNCTAD), global foreign direct investment actually contracted by 18% in 2023.
A further analysis of the source regions shows that the enthusiasm for investment in China from developed countries has not waned. U.S. Secretary of State Antony Blinken indicated during his recent visit to China that American businesses and investors still have a keen interest in the Chinese market and emphasized the importance of a fair competitive environment. Meanwhile, German Chancellor Olaf Scholz also visited China, accompanied by executives from several large German companies.
The Chinese government has responded, stating that it will further increase market opening efforts, provide better service guarantees, and strive to create a more favorable business environment for foreign enterprises. An important observed change within the Chinese market is the redirection of foreign investment from real estate and financial sectors to manufacturing and technological services, especially with a high proportion of investment in high-tech industries at 37.4%.
Data from China’s Ministry of Commerce further confirmed the viewpoint that high-tech manufacturing accounted for 12.5% of China’s actual use of foreign capital in the first quarter of 2024, showing a year-on-year increase. This indicates that the structure of foreign direct investment in China is undergoing positive optimization, with foreign capital entering the Chinese market through new channels such as stocks and bonds, in ways different from the past.
Historical data suggests that over the past decade, foreign investment has consistently accounted for a low percentage of China’s GDP. The proportion of foreign holdings in the stock and bond markets is also minimal. Economic experts point out that despite the low percentage, foreign investment significantly impacts China’s economy, such as contributions to consumption and imports and exports.
To stabilize and increase foreign investment, China should consider starting from various aspects to improve and promote, such as reducing the negative list of foreign investment access, enhancing support for high-tech enterprises, promoting the internationalization of Chinese companies, and maintaining the stability of the RMB exchange rate.
In the field of stock investment, although the proportion of foreign capital in the total market value of China’s A-shares is not high, their behavior in the market is sufficient to reflect their outlook on the Chinese market. According to Wind data, northbound funds significantly increased their positions in A-shares within one month, reaching a 13-month high. Additionally, a Goldman Sachs report shows that hedge funds had net purchases of Chinese stocks in four of the past five months.
Beyond traditional channels of foreign investment, capital from other regions like the Middle East is gradually becoming a new force in the Chinese market. Data show that the value of shares held by Middle Eastern financial institutions in the A-share market has nearly reached a scale of 10 billion yuan, indicating their growing attention to and investment in the Chinese market.
In the past two months, with the continuous increase in net inflows of northbound funds, Kweichow Moutai has become the most favored stock by foreign investors in A-shares, with a cumulative net purchase amount of 77.75 billion yuan. Wuliangye, another renowned liquor manufacturer, followed closely, attracting 68.48 billion yuan of net inflow. Other popular stocks include Shanxi Fenjiu and Midea Group.
The new energy sector’s Contemporary Amperex Technology, and the semiconductor industry’s Will Semiconductor, also received 76.93 billion yuan and 24.96 billion yuan in net inflows from foreign capital, indicating that emerging industries continue to receive high attention from foreign capital. Moreover, foreign inflows tend to favor high-dividend sectors, including bank stocks, which accounted for a quarter of the top 20 net purchased stocks, such as Industrial Bank, China Merchants Bank, ICBC, Jiangsu Bank, and Postal Savings Bank, among others.
Xu Ligao, China equity fund manager of the Franklin Templeton Emerging Markets Equity team, believes that China’s industrial policy is actively promoting progress in sustainable development areas. Combined with China’s massive population market of 1.4 billion, higher savings rates, and increasingly robust supply chain resilience, these factors are key to driving foreign capital to focus on stocks in consumer, new energy, and technology sectors.
Data from HSBC Holdings indicates that over 90% of emerging market funds are increasing their allocation to Chinese mainland shares, a proportion that was previously under-weighted. With market expectations for the U.S. Federal Reserve’s rate cut, overseas funds are starting to flow out of the U.S., shifting to non-U.S. markets like Japan and India. According to data provided by China International Capital Corporation, in the week up to April 17, foreign active inflows into Indian and Japanese stock markets were 0.5 billion U.S. dollars and 0.7 billion U.S. dollars, respectively.
Dong Ming Fang, the head of UBS Global Financial Markets in China, mentioned that in the past few months, compared to the trading desk, the configuration desk has seen more funds flowing into A-shares, and although the average daily purchase volume of A-shares by Shanghai-Hong Kong Stock Connect has decreased, the market value of stocks held by northbound funds has been steadily increasing.
From a valuation perspective, the performance of the Chinese stock market had fallen behind global markets in the past few years, but it is now showing stronger appeal. The balance of payments data indicates that foreign equity investment flowing into China has significantly decreased in 2023; however, the current price-to-earnings ratio of Chinese stocks is at an attractive low level—with the MSCI China Index’s forward P/E ratio at only 8.9 times, which is below the emerging market average.
Since February of this year, the China Securities Regulatory Commission has implemented a series of new measures aimed at stabilizing the confidence of domestic and foreign investors. On the eve of the Chinese New Year in 2024, the national team intervened to support the market, while the regulatory authorities relieved pressure on leveraged funds. On April 12th, China’s State Council issued guidance on strengthening capital market supervision and promoting high-quality development. Positively impacted by these measures, the A-share market led the gains among global stock indices in February. To date, the CSI 300 Index has risen nearly 6% since the beginning of the year.
Liu Mingdi, chief Asia and China equity strategist at JPMorgan Chase, believes that the cost performance of Chinese stocks is gradually improving and becoming the focus of global investors’ attention.
In the past year, many listed companies have taken measures to reduce costs, which has led to a notable improvement in their earning capabilities and cash flow conditions. Relatively slow growth in capital expenditures has also supported enhanced shareholder returns during the 2023 reporting period.
The financial reporting season of 2023 has revealed an encouraging phenomenon: For the first time since the end of 2020, the MSCI China Index is expected to achieve year-over-year positive growth in earnings per share (EPS). In comparison, data from JPMorgan Chase shows that since the end of 2020, the EPS performance of the MSCI China Index has not been able to surpass other Asia Pacific markets.
Market experts point out that there is a shift in the investment preferences of overseas capital in Chinese stocks, transitioning from growth-seeking to value hunting investments. When Chinese listed companies start to increase dividend payouts and focus on shareholder returns, investors have a significant opportunity to gain positive returns, even if the stock price does not fluctuate significantly. This is extremely important for stabilizing long-term investors.
In addition, a more perfected delisting mechanism can better protect the rights and interests of investors. Looking at the case of the Japanese stock market, after listed companies improve shareholder returns, continuous inflow of foreign capital has led Japanese stocks to reach a new 30-year high.
As for the factors driving the return of foreign capital to the Chinese stock market, experts point out that macroeconomic stability and moderate inflation are key driving forces. For example, the Consumer Price Index (CPI) in China only rose by 0.1% year-on-year in March, indicating moderate price increases. In the first quarter of this year, China’s Gross Domestic Product (GDP) also achieved a year-on-year growth of 5.3%.
Furthermore, the Head of Greater China Equities at Schroders Investment points out that government support measures for the real estate sector may help the market to bottom out in 2024. Concerns about inflation might gradually ease, with the industry supply and demand expected to reach a balance by 2024.
In terms of bond investments, since September 2023, foreign investors have been bullish on and have invested in China’s domestic bond market for seven consecutive months,
accumulating an increase in holdings of interbank bonds by 820 billion yuan. By the end of March, overseas institutions held 4 trillion yuan worth of interbank market bonds, accounting for roughly 2.9% of the market’s total custodial volume. Specifically, foreign investment in Chinese bonds saw the most significant increase in November last year, reaching 250 billion yuan, and maintained a level of around 200 billion yuan in the subsequent two months. Although the pace of foreign investment slowed down in February and March, to 80 billion yuan and 50 billion yuan respectively, overall, foreign investment continues to show a trend of consecutive increases in the Chinese bond market.
In terms of bond types, negotiable certificates of deposit are greatly favored by foreign investors. According to the Shanghai Clearing House data, from January to March this year, foreign institutions continuously focused on increasing their holdings of negotiable certificates of deposit, especially in March, when the increase reached 118.77 billion yuan, the highest monthly increase since 2014. Data from the Central Depository & Clearing Co., Ltd. also indicates that foreign institutions continuously increased their holdings of government bonds and policy financial bonds over four months last year, although this upwards trend reversed after February.
In general, experts from BNP Paribas state that such operations by foreign capital are actually typical “carry trade” strategies, with the government bond market often being the primary choice for such trading strategies due to its superior liquidity.
When economies adopt a loose monetary policy, investors usually look for opportunities for spread arbitrage, a situation that has been observed in Europe and Japan. Currently, China’s monetary policy is facing a similar scenario, as the People’s Bank of China needs to find a balance between maintaining monetary easing and keeping forex stability. Capital control policies have resulted in pricing differences between domestic and international interest rates and yield curves.
In the first six months of this year, the interest rate differential between China and the US has remained at a high level, while the yield on US Treasuries continues to be elevated, keeping investments in US government bonds attractive. By the end of April, the one-year China-US Treasury spread exceeded 350 basis points, with the yield on one-year US Treasuries reaching 5.203%.
The Head of Greater China Fixed Income at Goldman Sachs, Liu Sizhuang, points out that although the investment returns of China’s bond market may be relatively lower compared to the US bond market, the yield on short-term onshore bonds after foreign exchange hedging remains attractive, prompting foreign capital to reflow into China’s bond market. Foreign exchange hedging refers to using financial instruments to offset the risk caused by exchange rate fluctuations, with forex swaps being a very important method.
Currently, investors can obtain a hedging return of 3.7% through foreign exchange swaps, which combined with the 1.75% yield of RMB bonds, can ultimately bring investors a comprehensive yield of 5.45%. This figure surpasses the yield of 5% for one-year U.S. Treasury bonds.
Liu Sizhuang also mentioned that the current interest rate differential between China and the U.S. is inverted, which is the core reason for the significant discount in the USD/CNY swap points. The pricing of foreign exchange swaps is calculated based on the interest rate parity theory, which suggests that the forward premium or discount of a currency exchange rate should be equal to the interest rate differential between the two countries.
He continued, The People’s Bank of China has raised the foreign exchange risk reserve requirement ratio for forward foreign exchange sales, coupled with tightened liquidity in the offshore RMB market. These are some of the factors why domestic swap points are significantly lower than offshore levels. If a similar hedging strategy is adopted, then the yields in the offshore market would be significantly reduced.
According to statistics by the State Administration of Foreign Exchange, the heat of the foreign exchange swap market continues to climb. Since November 2023, the volume of bank customer swap transactions has stabilized between 40 and 50 billion U.S. dollars, and this volume has climbed to nearly 10% of the total volume of all spot transactions and derivatives with customers, surpassing the proportion and annual growth rate of both forwards and options.
Currently, foreign investors in China’s bond market include overseas central banks, commercial banks, and other institutions. Xu Zhaoting, Managing Director of Investment Banking at Deutsche Bank China, pointed out during the discussion that foreign investors have mainly increased holdings in short-term government bonds, financial bonds, or interbank certificates of deposit, and observed that active trading institutions such as overseas commercial banks are the driving force behind the increase in foreign holdings in China’s bond market.
Xu Zhaoting added that it should also be noted that with the inflow of funds into emerging markets, some allocation-type funds have also begun to flow into China’s bond market in order to maintain their proportion and weight relative to the bond index. Moreover, Wang Ju mentioned that there might be some foreign institutions involved in China’s bond market. These institutions typically have large USD deposits in places like Hong Kong and seek profits by engaging in foreign exchange swap transactions.
For foreign investors holding Chinese bonds, they may face challenges of interest rate, exchange rate, and credit risks. However, thanks to many investors adopting foreign exchange hedging strategies, and most policy bank bond issuers being policy banks, these risks are considered to be relatively controllable. With short-duration bond positions, these risks seem not too severe.
Observing the dynamics of foreign direct investment (FDI), according to data released by the Ministry of Commerce of China, in the first few months of 2024, China’s actual use of foreign investment amounted to 301.67 billion RMB, a 26.1% decrease from the previous year. Looking back at 2023, the total actual foreign investment used was 1133.91 billion RMB, a decrease of 8.0% from the same period of the previous year. The State Administration of Foreign Exchange’s data points out that China’s liabilities in direct investment in the international balance of payments increased by 42.7 billion USD in 2023, a drastic reduction of 78% compared to the previous year, clearly indicating a slowdown in new foreign investment.
Since the data from the Ministry of Commerce does not cover items such as reinvestment of profits by existing foreign-funded enterprises, private equity financing, and other overseas joint-venture loans, this also explains why there is a discrepancy between its fluctuation and the net inflow data published by the State Administration of Foreign Exchange. The data from the Administration further reveals the profitability trends of foreign enterprises and the changes in the scale of their operations in China.
Experts believe that the factors affecting foreign direct investment mainly include domestic economic demand conditions and the financial situation of foreign capital. Particularly when the Federal Reserve enters a cycle of interest rate hikes, funds flowing into developing countries typically face contraction. As foreign companies mostly finance in US dollars, it is somewhat challenging to channel capital into the Chinese market under these circumstances. Some estimates indicate that with the Federal Reserve’s interest rate hikes to 5.25%, the excess return rate of FDI is almost negligible. When ignoring those intermediary countries chosen for tax incentives, global direct investment declined by 18% in 2023.
For developing countries, foreign direct investment decreased in 2023, with an overall decline of 9%, and the developing countries in Asia faced a sharper fall of 12%. “When interest rates rise, the debt pressure on foreign-funded enterprises increases, profits decrease, which reduces the possibility of reinvesting in China.”
According to data released by the National Bureau of Statistics of China, in 2023, among industrial enterprises that met the annual turnover standards, the total profits of foreign-funded enterprises and enterprises invested by Hong Kong, Macao, and Taiwan investors saw a decrease of 6.7%. However, even under the circumstances of China’s reduced actual foreign capital utilization in 2023, this value still ranks at a historically high level, second only to that of 2021 and 2022.
It is worth noting that China’s investment attraction structure is undergoing continuous optimization. If we look at different industries, foreign direct investment is reducing in the real estate and financial sectors and flowing back to manufacturing and technological services, especially showing a beautiful scene in the growth rate of high-tech industries. In 2023, the proportion of investment attraction in high-tech industries was 37.4%, while that in manufacturing rose from 18% in 2021 to 27.9% in 2023.
Moreover, data from the Ministry of Commerce shows that in the first three months of 2024, high-tech manufacturing accounted for 12.5% of China’s actual use of foreign capital, an increase of 2.2 percentage points compared to the same period last year. Among them, the actual use of foreign capital in the medical equipment and instrument manufacturing industry increased by 169.7% year-on-year.
In the global economic landscape, the investment by manufacturing powerhouses witnesses China’s enormous attractiveness. For example, Germany’s direct investment in China reached an unprecedented 11.9 billion euros in 2023, accounting for 10.3% of its total overseas investment, marking the highest point in nearly a decade. Direct investments from France and Spain to China in the first two months of the year also increased significantly, by approximately 400% to 500% respectively. This expansion spans several key industries, including automotive, aviation, and energy chemicals.
As China grows into the world’s largest electric vehicle market, international car companies are also increasing their investments here to start new projects. Besides producing electric vehicle models, BMW has also initiated a new generation battery project. To support the electric vehicle ecosystem, the joint venture between Mercedes-Benz and BMW plans to build at least 1,000 charging stations and 7,000 supercharging piles in China by the end of 2026. Meanwhile, the testing center established by Audi in collaboration with FAW Group in Changchun has been put into operation, reflecting the significant investment in China’s new energy sector. Volkswagen is also not standing by, as it opens its R&D center in China to respond to the demands of Chinese young consumers for human-machine interaction and software innovation, and to drive the industry towards intelligent transformation.
In fact, for many multinational corporations, the Chinese market is not just a destination for sales, but has also become a testing ground for business and technological innovation. This role evolution has strengthened the strategic position and irreplaceability of the Chinese market. As Ni Yilei, Chairman of McKinsey Greater China, mentioned at a CEO luncheon, companies agreed that business in China accounts for a significant proportion and that it is necessary to find solutions to challenges and deeply cultivate the Chinese market.
The significance of foreign investment in China also lies in the characteristics of the Chinese market itself. Compared to the past, China not only has a cost advantage today but also possesses a complete supply chain, new technology applications, and a high-efficiency energy system, making it an ideal place to reduce production costs. This is fully demonstrated by Tesla’s example. Since its Shanghai factory started production in 2019, a large number of locally produced components have effectively reduced costs. The factory not only supports more than half of Tesla’s delivery volume but also exports to many countries around the world.
As observed by Professor Xing Yuqing from the National Graduate Institute for Policy Studies in Japan, we are in an era of oversupply. The country and company that can lead the demand will determine the direction of the global industry and the layout of the value chain. In this context, the position of the market often indicates the future direction of the industry and the value chain.
The central position of a company in the value chain can bring a cumulative effect of technology and branding. In the chemical industry, the Chinese market not only has a significant share, but it is also growing rapidly. It is predicted that three-quarters of the industry’s growth will come from China in the next decade. Therefore, BASF Group plans to deepen its investment layout in the Chinese market.
BASF Group has invested up to 10 billion euros to build a new chemical production base in China, comparable in size to the company’s headquarters in Ludwigshafen. At the same time, the CEO of Airbus says that the company is steadily increasing its investment in Tianjin, China, such as expanding the second assembly line. This represents not only the expansion of the production line but also the many accompanying production facilities that follow.
According to Liang Ming, Director of the Institute of International Trade and Economic Cooperation, Ministry of Commerce, China’s manufacturing industry accounts for a large proportion of the national economy and has surpassed traditional manufacturing powerhouses such as Germany. This reality provides a solid foundation for China to form a complete supply chain system. Although influenced by factors such as labor costs, some labor-intensive industries may decrease, foreign enterprises still choose to stay in China for R&D and design, which shows that the investment structure of foreign capital in China is continuously optimizing. In emerging service industries and high-end manufacturing, the use of foreign capital has generally increased, which also confirms this point.
In 2023, China’s industrial added value approached 40 trillion yuan, accounting for 31.7% of the Gross Domestic Product (GDP), with its manufacturing sector exceeding 30% of the global total. Therefore, stabilizing the inflow of foreign capital is crucial to economic growth. Over the past decade, foreign capital has accounted for less than 2% of China’s GDP on average.
However, the importance of foreign investment to China’s economy is not only reflected in figures but also in the advanced technology, management methods, international standards and rules, and the promotion of international market competition brought about by foreign direct investment. The participation of foreign enterprises such as Apple and Tesla has undoubtedly promoted the development of related industries. In terms of investment and tax contributions, foreign enterprises still have a significant impact on national revenue. In 2022, foreign-invested enterprises accounted for 20.7% of the revenue of industrial enterprises above a designated size in the country, 23.8% of the total profit, 17.6% of the tax share, and about one-third of the total import and export trade.
Financial analysts predict that by 2024, approximately 70 billion US dollars of foreign capital will flow back into China’s onshore and offshore stock markets. Meanwhile, the scale of foreign capital inflow into the bond market is expected to reach 400 to 500 billion yuan. On the stock market, whether listed companies continue to pay dividends has become a concern for investors. Investors hope to gain a deeper understanding of China’s policy-making mechanisms and procedures to assess the impact on future investment returns in advance.
As new policies are introduced, investors are increasingly favoring value stocks that offer generous dividends and active buybacks. Some state-owned enterprise listings may meet these criteria more closely. In terms of industry selection, consumption, energy, and technology sectors seem to face more opportunities. Lastly, “cash flow, balance sheet, and profit growth” are the stock indicators analysts focus on the most.
Long-term investors focus on several key indicators of the Chinese economy, reflecting how businesses not only maintain their market share but also gain an advantageous position in fierce competition. According to statistics from financial institutions, the onshore listed companies in China saw their dividend payouts significantly increase in the first quarter, 1.8 times the average value of the same period over the past three years. Forecasts show that the target range for the Shanghai and Shenzhen 300 Index by 2024 will be between 3500 and 4200 points, with the neutral expectation at 3900 points. At the same time, the growth rate of earnings per share for the Shanghai and Shenzhen 300 Index is expected to reach 9.5% in 2024.
China’s Securities Regulatory Commission recently issued the “5 measures for capital market cooperation with Hong Kong,” which expands the range of eligible products for stock ETFs under the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects, significantly facilitating foreign capital allocation to Chinese assets. In addition, this measure marks the official inclusion of REITs in the product list of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects.
Market analysts point out that the establishment of the interconnection mechanism is similar to a “highway” between the mainland and Hong Kong. The completion of this highway depends on the regulatory authorities issuing vehicle licenses to ensure smooth traffic. At the stock market level, it means the continuous expansion of product range under the interconnection mechanism. This not only enhances the attractiveness of the capital markets of mainland China and Hong Kong to high-quality targets but also integrates more quality targets into the interconnection mechanism, bringing vitality to the market.
When discussing the bond market, another analyst believes that although foreign capital may have taken profits on their bullish trades on short-term government bonds, their operations of going long on interbank certificates of deposit via foreign exchange swaps still attract investments due to their valuations. The trend of foreign capital continuously holding Chinese bonds is expected to continue. At the beginning of 2023, government bonds and government-backed financial bonds issued in Mainland China were included in the list of eligible collateral. This change has expanded the function of these bonds, making them available not just for investment and trading, but also for financing purposes, thereby enhancing investors’ willingness to hold assets in the Chinese bond market, and propelling the internationalization process of the Renminbi.
Moreover, to hedge against the interest rate risk of foreign-held bonds, the “Northbound Swap Connect” started operation in 2023. According to official data, the average daily notional contract value traded by this institution doubled and more during the initial launch period. Analysts indicate that the scale and liquidity of China’s bond market are significant, which is vital for attracting foreign investment. A rich set of derivative tools and risk management capabilities also help foreign investors manage various market risks effectively and stabilize the value of their holdings.
Regarding direct investment, the State Council issued a series of policy measures aimed at optimizing the foreign investment environment – the “24 Articles on Foreign Investment” in August 2023. Additionally, in March, the “Action Plan for Attracting and Utilizing Foreign Investment with Higher Standards and Greater Intensity” was introduced. These measures include shortening the negative list for foreign investment, opening up telecommunications and healthcare industries, expanding market access for foreign financial institutions, increasing the types of businesses that foreign entities can operate in China’s capital markets, and offering more visa convenience. Market analysts believe that these measures will protect the national treatment of foreign-invested enterprises and address concerns regarding procurement and bidding. This could not only enhance the profitability of foreign enterprises but also promote their reinvestment in China.
As globalization continues to evolve, the policies adopted by governments worldwide have profoundly impacted cross-border data flows. China’s initiatives in this field have not only clarified relevant standards but also significantly contributed to the regulation of foreign enterprises in data privacy and ethical practices, effectively eliminating some of the concerns of foreign investors.
On this matter, Wang Tao expressed his views in an interview: “The Chinese government is opening up more industries to foreign capital and is committed to optimizing the business environment, which undoubtedly helps attract more foreign investment.” Despite this, factors such as high US interest rates, supply chain shifts, and the diminishing cost advantage of China’s labor force pose challenges to attracting foreign investment.
In Zhang Ming’s view, foreign enterprises generally pay close attention to China’s business environment and have strong expectations for genuine national treatment. Zhang Ming mentioned: “Foreign enterprises expect China to further implement the negative list system and ensure the national treatment is applied equally to both domestic and foreign investments.” Furthermore, accelerating the opening up of the service sector and advancing the construction of a unified domestic market are effective measures that can further leverage the supporting advantages of China’s industrial chains.
The International Monetary Fund (IMF) representative in China, Barnett, predicts that in the next two years, China’s contribution to global economic growth will remain at around one quarter. And many people have high hopes for the future development of China’s economy, as no one wants to miss out on a rapidly growing massive market.
Xing Yuqing also issued his warning: Under the joint influence of many factors, including subsidy policies, tariff sanctions, changes in labor costs, and high-tech industries such as the semiconductor industry and labor-intensive industries will face the restructuring of the value chain. In this round of restructuring, if Chinese enterprises want to maintain their influence, they need to upgrade their value chains, increase investment in core technologies, and build their own brands. Furthermore, expanding domestic demand and driving the further enhancement of production capacity is also key.
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