Caixin Editorial: The Benefits of Stabilizing Foreign Investment in China

Driving high-quality development and building an innovative nation cannot proceed without the involvement of capital from abroad

A European businessman tries out a Geely new-energy vehicle on May 17 in Ningbo, East China’s Zhejiang province. Photo: VCG

The Chinese government has once again emphasized its commitment to foreign investment. Recently, the State Council outlined 24 policy measures in its Opinion on Further Optimizing the Environment for Foreign Investment and Enhancing Efforts to Attract Foreign Investment. These measures cover a range of areas including improving the quality of foreign capital utilization, ensuring national treatment for foreign-invested enterprises, continuously strengthening the protection of foreign investments, enhancing the convenience of investment operations and intensifying fiscal and tax support. The content is comprehensive. This year, direct foreign investment in China has significantly declined. The opinion is a proactive response to the concerns of foreign enterprises. If effectively implemented, this document will undoubtedly help alleviate the concerns of foreign investors and stabilize expectations to ensure a steady influx of foreign capital.

The significance of foreign investment to China’s economy goes without saying. A few years ago, the Chinese government included stabilizing foreign investment among its “six stabilization” priorities. The opinion further emphasizes “greater efforts and more effective ways to attract and utilize foreign investment.” The Chinese government’s emphasis on attracting and utilizing foreign investment is rooted in pressing realities. For over a decade, China’s economic growth has come under pressure. It took a severe hit during the three-year pandemic. While efforts are being made to get it back on track, the recovery has lagged behind expectations. A concerning sign is evident: amid complicated domestic and international factors, there’s an apparent trend toward economic and social introspection within China. This trend is decidedly detrimental to deepening reforms, opening up, and pursuing high-quality development.