China, 40 Years of Foreign Investment: a Phenomenon That Continues to Grow

20/09/2019

 

At the end of last year, over 960,000 foreign-invested companies had been established in China

 

40 years have passed since the first foreign company decided to invest in China. Since then, without a doubt, the economic development of the Asian country has been closely linked to investors from abroad.

After China began implementing the reform and the opening up of politics in the late 1970s, the country applied the law on joint venture companies, laying the legal foundations for attracting foreign investors. From 1983 to 1991, foreign direct investment (FDI) in China rose from $ 920 million to $ 4.37 billion.

While China began working to build a socialist market economy in 1992, a total of 48,764 companies with foreign investments were registered that year, exceeding the total amount for the previous 13 years.

 

Investments come from all over: Asia, Europe and North America

 

From 1992 to 1997, FDI in China increased from 11 to $ 45.3 billion, with an average annual rate of 32.7%. After China joined the WTO in 2001, the foreign trade giants began to set up wholly foreign-owned companies, joint-venture joint ventures and contractual joint ventures in the country.

In 2018, then, FDI in China reached $ 138.3 billion, 151 times that of 1983, representing an average annual rate of 15.4%. Furthermore, by the end of 2018, the inflow of FDI to China was in second place in the world for two consecutive years and the first among developing countries for 27 consecutive years.

At the end of last year, over 960,000 foreign-invested companies had been established in China, with accumulated foreign direct investments exceeding $ 2.1 trillion. At present, the country has attracted investments from over 200 countries and regions. In 2018, major investments came from Asia, the European Union, North America and free port areas.

Starting from the south-eastern coast of China, foreign companies have extended their activities from labour-intensive industries, particularly the manufacturing sector, to sectors ranging from services to high technology.

 

Today, China is home to over 2,000 regional offices and research and development centers for multinational companies

 

As service sectors such as information, finance, wholesale and retail trade, housing and catering attract more investment, the tertiary sector has become the main destination for such investments.

Today, China is home to over 2,000 regional offices and research and development centres for multinational companies, with an improvement in the quality of foreign investment and the optimization of the industry structure.

China has made consistent efforts to optimize its business environment and embrace investors worldwide. Last March, for example, the Chinese national legislator approved the foreign investment law, the reference legislation for foreign investments, which will come into force on 1 January 2020.

According to the law, China will create a stable, transparent, predictable and fair market environment. The country will also increase the limit of investment quotas for foreign investors authorized to boost financial reforms and openness.

Determined to safeguard free trade and integrate into economic globalization, China will continue its successful cooperation with investors around the world.

 

 

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