China’s actual use of foreign capital in Q1 remains at historically high level, defying West’s ‘foreign capital withdrawal’ rhetoric

A view of the skyline of Lujiazui in Shanghai on January 24, 2024 Photo: VCG

A view of the skyline of Lujiazui in Shanghai on January 24, 2024 Photo: VCG

China’s actual use of foreign capital in the first quarter of this year remained at a historically high level, an official with China’s Ministry of Commerce (MOFCOM) said at a press conference held by the State Council Information Office on Friday, defying claims by some Western media that foreign capital is withdrawing from China.

The country’s continuous opening-up, supportive policies and industry upgrade are among the key drivers for more foreign capital, officials and experts said.

Friday’s data also reflect the fact that the world’s second largest economy continues to be attractive to foreign businesses, despite the West’s intensified attempts at “decoupling” or de-risking.

Speaking at Friday’s press conference, Guo Tingting, vice commerce minister said that the number of newly established foreign-invested enterprises in the first quarter of this year came at 12,000, an increase of 20.7 percent, maintaining the rapid growth trend from last year.

In terms of investment scale, the actual use of foreign capital reached 301.67 billion yuan ($41.67 billion), which was still at a historically high level, the vice minister said.

It is noteworthy that in terms of investment structure, the proportion of investment in high-tech manufacturing reached 12.5 percent during this period, an increase of 2.2 percentage points year-on-year, according to Guo.

Investment in the service industry, which is closely related to residents’ lives, also witnessed rapid growth.

The growth was driven by multiple factors, particularly China’s continuous opening-up efforts, improved market environment and industry upgrade, officials and experts said.

For example, the “Invest in China” series of activities as part of the government’s opening-up effort has received an enthusiastic response. The first landmark event alone attracted more than 140 representatives of foreign companies and business associations from 17 countries and regions, according to the MOFCOM official on Friday.

The continuous optimization of China’s business environment for foreign enterprises allows more of them to participate more fully in China’s development and gives them a sense of achievement, Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Friday.

Although there is foreign capital moving out of China, Bai said it is a part of capital market development. “Foreign investment comes and goes, much like the continuous flow of international capital markets, but the structure is constantly optimizing,” Bai said. 

As China pursues industry upgrades for high-quality development, many foreign investments, especially those with advanced technology, choose to expand their investments and outlays in China, experts said, defying some Western rhetoric that there is a trend of foreign capital leaving the country.

In the first quarter, the actual use of foreign investment in the manufacturing industry reached 81.06 billion yuan, of which investment in high-tech manufacturing reached 37.76 billion yuan, Ji Xiaofeng, an official with the department of foreign investment management under MOFCOM, told the press conference on Friday.

Data from some leading international consultancies also pointed to the positive trend.

The 2024 Kearney FDI Confidence Index released by American global management consulting firm Kearney shows China jumping from 7th position to 3rd, which shows that multinational companies will continue to expand their investment in China.

In the first quarter, China’s GDP grew 5.3 percent, which was well above market expectations, as the country got off to a robust start, laying the foundation for achieving its goal of growing by around 5 percent for the whole year.

As the trend of China’s economic development is further consolidated, foreign companies see new opportunities for growth in areas such as green transformation and digitalization.

Meanwhile, more policy support is also in place to boost foreign investment.

On Friday, MOFCOM, together with nine other government departments, including the Ministry of Foreign Affairs, the National Development and Reform Commission, the Ministry of Industry and Information Technology and the China Securities Regulatory Commission, issued 16 specific measures to further support overseas institutions’ investment in domestic technology-based enterprises.

These measures include implementing differentiated supervision, supporting bond issuance and facilitating personnel exchanges.

On the same day, China’s top securities regulator issued 16 measures to boost capital markets’ support for high-tech companies, including setting up green channels for fundraising, in a bid to boost innovation and development of new quality productive forces.

In March, China’s State Council, the cabinet, issued an action plan comprising 24 specific pro-foreign investment measures to attract foreign investment, facilitate data flows and business travel. The action plan demonstrates the Chinese government’s determination and efforts to attract foreign investment, which plays a positive role in further promoting high-level opening-up, experts said.

Looking ahead, Ji said that MOFCOM is further easing barriers to foreign investment, including reasonably reducing the negative list for foreign investment access, comprehensively abolishing access restrictions in the manufacturing sector, and relaxing market access in the medical, telecommunications and other service industries.

Canton Fair facilitates, improves payment options for foreign attendees

Mobile payment Photo:VCG

Mobile payment Photo:VCG

“I was informed of several ways to change money by staffers at the airport. They also taught me how to make mobile payments through Alipay. I can’t wait to experience digital payments,” Sophie, a first-time Canton Fair purchaser from Germany, told the Global Times on Sunday at Guangzhou Baiyun International Airport in South China’s Guangdong Province.

Sophie is among foreign arrivals to the 135th session of the China Import and Export Fair, commonly known as the Canton Fair, which is being held from Monday to May 5, who will enjoy improved payment services during their stay in Guangzhou. Improving payment services is part of China’s opening-up to welcome foreign guests.

Liu Qing, a senior manager of the Personal Digital Finance Department at the Bank of China (Guangdong Branch), told the Global Times during a group interview that the bank has placed more than 120 point-of-sale (POS) terminals that accept foreign bank cards in the venues of the Canton Fair.

“We focus on providing more convenient foreign currency exchange services, covering all branches in Guangdong. We also provide self-service exchange machines in the province. A total of 46 foreign currency exchange points have been set up in hotels, ports, exhibition halls and other places where foreigners often visit when coming to Guangdong,” said Liu.

In order to facilitate digital payments for foreign visitors to the Canton Fair, Alipay, a major mobile payment platform in China, launched an “International Visitors Service Zone,” a multi-function platform designed for foreigners in Guangdong. 

It functions under the mini program “OneStop” with 16 languages provided.

The zone provides more than 30 digital application services in English, including purchasing local phone cards, taxi booking, hotel booking, car and ship ticket booking, takeout and express delivery, the Global Times learned from the Canton Fair organizer.

The biannual Canton Fair welcomes hundreds of thousands of overseas exhibitors and purchasers. As of Saturday, more than 144,000 purchasers from 215 countries and regions had completed registration for the event, the Global Times learned from the organizer.

Guangdong is an important destination for foreigners coming to China, the People’s Bank of China, the country’s central bank, said on April 1 when holding meetings on optimizing payment services in Guangdong’s Guangzhou and Shenzhen.

The PBC asked relevant departments to cooperate to increase POS terminals that accept foreign bank cards and ATMs that allow withdrawals with foreign cards.

China is improving the payment experience, especially for digital payments, for foreigners traveling or doing business in the country.

The Ministry of Commerce (MOFCOM) has been making efforts with relevant departments and has released the “Guide to Working and Living in China as Business Expatriates” to help cross-border business personnel exchanges so that the world can share China’s vast market, an official from the MOFCOM said on March 27 during a press conference.

As mobile payments cover all aspects of life in China, including food and transportation, providing payment convenience for foreign nationals in China is a major undertaking, the MOFCOM official said.

On March 7, China released a guideline to better meet the payment needs of foreigners and the elderly, calling for coordinated efforts by various authorities to promote the acceptance of foreign bank cards, guarantee the use of cash, improve mobile payment convenience, and further protect consumer rights while choosing payment methods and optimizing account services.

Efforts to make travel to China easier result in uptick in visits

A tour guide introduces the stories of Dazu Rock Carvings to foreign visitors in Chongqing on March 27. TANG YI/XINHUA

British travel vloggers the Hutchinsons said China “shocked” them, after embarking on a three-month tour of the country.

The family, which has 52,000 subscribers on YouTube, made their first stop on their inaugural trip to China in Guangzhou, capital of the southern province of Guangdong, in mid-March.

In their videos, they’ve explored cities including Guangzhou, Foshan and Xiamen in Fujian province and tasted some authentic Chinese food. They evaluated the cities as being “safe, beautiful and amazing”, and have learned to use some online payment tools such as WeChat Pay.

“When visiting China, you’ll realize that cashless pay is a part of everyday life, from local fruit stores to bars, restaurants, cafes and shops. Everybody uses it, and it provides smooth and convenient transactions for your day, including shopping, dining, ordering takeouts, or even transport,” said Chris Hutchinson, father of the family, in one of the videos.

China’s inbound tourism has steadily recovered in recent months after the central government stepped up efforts to optimize entry policies from the end of last year.

CRRC’s withdrawal from Bulgaria bid shows rising EU protectionism: CCCEU

This aerial photo taken on Jan. 4, 2023 shows bullets trains at a garage of CRRC Qingdao Sifang Co., Ltd. in Qingdao, east China's Shandong Province. As a major manufacturer of high-speed trains in China, CRRC Qingdao Sifang Co., Ltd. overhauled the trains that will serve the upcoming Spring Festival travel rush to ensure their smooth operation.(Photo: Xinhua)

This aerial photo taken on Jan. 4, 2023 shows bullets trains at a garage of CRRC Qingdao Sifang Co., Ltd. in Qingdao, East China’s Shandong Province. Photo: Xinhua

Chinese train maker CRRC’s withdrawal from a Bulgarian train tender adds to the evidence suggesting the EU side has wielded the Foreign Subsidies Regulation (FSR) as a new tool to deter foreign companies, coercing them into withdrawal and subsequent business exclusion, the China Chamber of Commerce to the European Union (CCCEU) said on Tuesday.

Following CRRC’s withdrawal, the European Union (EU) announced on Tuesday that it would close its subsidies probe into CRRC Qingdao Sifang Locomotive, a subsidiary of CRRC Corp, the world’s biggest producer of rolling stock.

The CCCEU expressed deep concern about non-market-based exclusion of Chinese companies and strongly urged the EU to uphold principles of fairness and transparency, and to ensure an equitable business environment for Chinese enterprises in the EU market.

CRRC has withdrawn from a €610 million ($660 million) public train tender in Bulgaria after the EU launched a probe into foreign subsidies, the European Commission said on Tuesday.

In recent years, the EU has stepped up trade protectionism against China. In February, the EU’s antitrust regulator launched an investigation into CRRC, alleging that it had not declared state subsidies it received that enabled its bid to hugely undercut a rival bid from Talgo, a privately owned Spanish rail company, which was the only other bidder.

The move marks the EU’s first in-depth investigation under the Foreign Subsidies Regulation (FSR) since the FSR was released in July last year. The FSR is one of a series of measures passed by the EU in recent years to bolster the bloc’s economic security, with China seen as a key focus.

CRRC is the world’s largest train manufacturer, and CRRC Qingdao Sifang is its core subsidiary, specializing in high-speed train development and urban rail vehicle manufacturing. It is also a key exporter of national rail equipment.

The subsidiary offered its bid in the Bulgarian tender last December at about half the price of Spain’s Talgo, making it highly competitive. The European Commission attributed CRRC’s lower bid to subsidies from the Chinese government.

Amid the growing protectionist climate, the EU has been adding to its commercial weaponry. The highest-profile case has been the ongoing probe into China’s electric vehicle exports, which is expected to result in duties starting in July, according to the South China Morning Post.

China’s Ministry of Commerce in February urged the EU to adhere to WTO rules, respect the principles of the market economy, and use the foreign subsidies regulation prudently, in response to its probe into CRRC.

Global Times

Shanghai, Beijing, other cities improve foreigners’ payment service

Mobile payment Photo:VCG

Mobile payment Photo:VCG

Major Chinese cities like Beijing and Shanghai have stepped up efforts to improve means of payment for foreign travelers, a move to promote inbound tourism and high-level opening-up. 

Shanghai, frequently picked up by overseas visitors as their first stop to China for business, study or sightseeing, will optimize payment service linked with bank cards, promote the use of cash and facilitate mobile payment to meet the diverse preferences of foreigners, Hua Yuan, vice mayor of Shanghai, told a press conference on Thursday.

“We have improved the cross-border payment functions of UnionPay, Alipay and WeChat Pay to facilitate mobile payments on the side of Chinese merchants. UnionPay can support users of more than 180 overseas wallets to make payments, and Alipay can support e-wallets from 10 countries and regions to make payments in China, Hua said.

In terms of bank cards, the city has newly opened more than 37,000 foreign card point-of-sale (POS) terminals, covering sites of commerce, culture and tourism, and airports. 

The total number of foreign bank card POS swipes, and the per customer transaction value in Shanghai are both leading other cities in the Chinese mainland, said Hua.

Shanghai also has a large number of yuan cash withdrawal or exchange outlets, including more than 8,000 automatic teller machines (ATMs), over 3,500 Chinese bank outlets, and 183 foreign currency exchange outlets.

Hua said that Shanghai will promote the full coverage of foreign card withdrawals of yuan cash from ATMs stationed in the city.

On Tuesday, the Beijing municipal government released an action plan to optimize its payment services. 

The capital city will continue to improve the user-friendly level and convenience of payments such as mobile payments, bank cards and cash. As of the end of December, the city will have basically solved the payment difficulties of elderly people, foreigners coming to Beijing and other groups.

“In Shanghai, everything can be paid for by using a QR code – this is very different from my home. It’s super convenient,” an Australian tourist who requested anonymity told the Global Times on Thursday.

“It makes Shanghai feel much more international and connected. It also helps in keeping track of how much you spend – which is great for a shopaholic like me,” the tourist said.

Alejandra Clemente Romagnoli, a tourist from Mexico who has visited Shanghai, told the Global Times that she usually uses Alipay or WeChat Pay, and the accounts are associated with her Chinese bank cards. 

“It is very easy to use mobile payments. Just take your cellphone and go out. In Mexico, I had to carry cash and a bank card,” she said.

The two cities’ moves came after China released on March 7 a guideline to better meet the payment needs of foreigners, which experts said is conducive to boosting domestic consumption while demonstrating the country’s commitment to high-level opening-up.

“By installing new foreign card POS machines and promoting the facilitation of payments, these cities have provided a more convenient and efficient payment environment for foreign tourists,” Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Thursday.

“These measures have also promoted consumption and expanded domestic demand, further boosting China’s economic growth,” Wang said.

Wang added that a convenient and efficient payment environment can reduce the transaction costs of enterprises and improve the efficiency of capital utilization, enhancing competitiveness.

By promoting payment facilitation, China can enhance its attractiveness in the international investment market and attract more foreign investment, he said.