FDI data reveal many positives; foreign investment may rise despite odds

China's supportive policies and its latest industrialization drive will open up more opportunities in advanced manufacturing and digital transformation in its vast market, said analysts and business leaders on Monday after reviewing latest data on foreign direct investment.

The Ministry of Commerce released data on Monday that showed FDI in China's manufacturing industry grew by 1.9 percent year-on-year to 283.44 billion yuan ($39.47 billion) in the first 10 months, while that in high-tech manufacturing surged 9.5 percent.

During the same period, FDI in China's medical instrument and equipment manufacturing sector surged by 34.6 percent year-on-year, and that in the electronic and communication equipment manufacturing sector increased by 14.8 percent.

FDI in the Chinese mainland in terms of actual use, however, dropped 9.4 percent year-on-year to 987.01 billion yuan during the period, the Commerce Ministry said. But that piece of data did not dampen the overall positive mood among trade and corporate luminaries.

Despite a subdued investment sentiment worldwide, China's recent announcement to remove all restrictions on foreign investment access to the manufacturing industry, as well as favorable government policies that spur innovation, will hold great appeal to multinational corporations, said Sun Xiao, secretary-general of the Beijing-based China Chamber of International Commerce.

That view is in line with the latest data. The number of newly established foreign-invested enterprises in China reached 41,947 between January and October, up 32 percent year-on-year, according to the Commerce Ministry.

"The new industrialization drive stands as a pivotal force guiding China's future development, presenting fresh prospects for global companies, especially those from the high-end manufacturing sector," said Sun.

"Given the enhanced productivity and well-developed infrastructure, China has been, is and will continue to be the world's manufacturing center."

During the 10-month period, FDI from Canada, the United Kingdom, France, Switzerland and the Netherlands jumped by 110.3 percent, 94.6 percent, 90 percent, 66.1 percent and 33 percent year-on-year, respectively.

Maximilian Foerst, president and CEO for China unit at Zeiss Group, said China's huge consumption market, complete manufacturing clusters and reasonable allocation of resource factors have helped the German optical systems and optoelectronics manufacturer achieve performance growth and enhanced its investment confidence in the Chinese market.

"Anti-globalization and 'decoupling' measures are not a wise choice. We are unequivocally a global company, with more than 80 percent of our revenue generated beyond Germany. We are committed to fostering fair trade relations and maintaining an open stance, which is our foremost priority and attitude," said Foerst.

Sharing similar views, Peter Weckesser, chief digital officer and executive vice-president of Schneider Electric SE, a French industrial and energy conglomerate, said that China's green and digitalization transformation will bring a multitude of opportunities. The French company's strengths align well with this trend and it will continue to invest in more innovation-related activities within the country in the next phase.

"I have witnessed China's digitization and industrial transformation in areas such as artificial intelligence and 5G for many years," said Weckesser. "China has taken a leading position globally. Whether it's for our customers or our group, the country is currently at the forefront in these fields, and I believe this trend will continue."

Wang Xiaohong, deputy head of the information department at the China Center for International Economic Exchanges, said that promoting the deep integration of the digital economy and the traditional industrial economy is crucial to realizing new industrialization in China. This will give rise to "new infrastructure", novel application models and a fresh industrial ecosystem, he said.

"New infrastructure" refers to critical facilities for information technologies like 5G and the internet of things, which enable interconnections between networks of devices for data exchange.