More foreign capital for economic growth
- Recent figures issued by the NPC show that foreign capital contributions to key economic indicators are still too large to be ignored by policymakers who seek to revive the economy.
- Although slightly decreasing since 2015, foreign-invested companies still contribute 20 percent to China’s industrial GDP (24 percent in 2015).
- Chinese politicians have therefore recently increased rhetoric on their openness to foreign investment on several occasions. Vice-premier Liu He said in Davos that “China’s door to the outside will only open wider”.
- An official report reviewing the implementation of the Foreign Investment Law was surprisingly outspoken on the problems of informal market access barriers. For example, it explicitly admitted that foreign carmakers have difficulties getting approval for new NEV projects despite the official removal of ownership caps.
Easier access only to China’s advantage
- For 2023, China announced further removal of official market access barriers in sectors such as services, medical and elderly care and education.
- Less progress can be expected in state-dominated sectors like telecommunication or energy, where foreign companies are urgently waiting to get access to digital business licenses.
- The Economic Work Conference committed to improving equal treatment in standard-setting and public procurement. Something often heard before. Local officials under pressure to meet their growth targets might be keen on attracting more investment and hold up some of these promises. Selected landmark projects will be used to restore some trust among the foreign business community.
- However, in strategically important industries, like advanced manufacturing and semiconductors, China will not deviate from its aggressive industrial policies. The approach to foreign business remains highly strategic and it will only open doors to foreign capital if no domestic alternative is available.