Published: 14:38, December 17, 2021 | Updated: 14:38, December 17, 2021
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Experts link FDI to growth stability
By Liu Zhihua

An employee works on the production line of an automobile joint venture in Wuhan, Hubei province. (ZHOU CHAO / FOR CHINA DAILY)

China is expected to intensify efforts to stabilize expectations of foreign investors as growth stability is the priority of next year's economic work, experts said on Thursday.

Their views emerged in response to the latest data on foreign direct investment from the Ministry of Commerce.

FDI in actual use surged by around 16 percent year-on-year to more than 1.04 trillion yuan ($163 billion) during the first 11 months of this year. In US dollar terms, FDI exceeded $157 billion, up 21.4 percent year-on-year.

As the Chinese economy faces downward pressure from demand contraction, supply shocks and weakening expectations, the annual policy tone-setting Central Economic Work Conference, which concluded last week, emphasized expanding high-level opening-up and strengthening efforts to attract more FDI.

Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, said it is necessary to further demonstrate to foreign investors China's firm stance on deepening reform and expanding opening-up.

That will stabilize their expectations to secure growth in foreign investment, which will help beef up China's economic growth, he said.

Agreed Huo Jianguo, vice-chairman of the China Society for World Trade Organization Studies, which is based in Beijing. Huo also noted that the Chinese government has always attached great importance to facilitating FDI growth, as FDI plays an important role in the healthy operation of the Chinese economy.

The nation has adopted various measures over the years to boost its use of foreign capital. Such measures include reducing taxes, shortening the negative list for foreign investment, and lifting foreign ownership caps in sectors like securities, futures and life insurance.

China has also become a major destination for FDI seeking market opportunities and profits. That is because the country boasts a huge market, strong economic resilience and continuous opening-up, which should help share its development dividends with the rest of the world.

In 2020, FDI in China rose by 6 percent to $149 billion, a contrast to investment flows elsewhere that plunged globally by 35 percent due to COVID-19.

That reflected China's success in containing the contagion and its rapid GDP growth recovery, according to the United Nations Conference on Trade and Development.

"The enhancement of a market mechanism-based and law-abiding domestic market that is up to high-level international standards, should be the focus in the next phase to boost foreign investors' confidence in China and attract more foreign investment," Huo said.

Zhang of the CCIEE said it is critically important for China to improve the business climate for foreign investors.

The Commerce Ministry said the nation will continue to reduce items on the negative list for foreign investment, strengthen services and protection for foreign-funded enterprises and projects, and foster a constantly improving business environment.

Huo suggested the nation should take more measures to further open up its services sector to foreign investors as the sector's growth remains a key impetus for worldwide economic growth.

Ministry data showed actual use of FDI in China's services sector surged 17 percent year-on-year during the January-November period to 824 billion yuan, or about 80 percent of total FDI inflows.

FDI in the high-tech industry grew about 19 percent year-on-year during the same period. FDI in high-tech services rose by about 21 percent year-on-year and that in high-tech manufacturing by 14 percent.