Foreign investment in Chinese industry grows
Since the beginning of the year, China has had a new law that allows foreign nationals to own local passenger car manufacturing facilities. In 1994, the PRC banned foreign investment in this type of industry. In 2018, however, the government revised the law and introduced a training process for the sector to make it open to investment.
The Chinese economy has long been closed to foreigners. For example, to do business in the country, one had to form a joint venture with local entrepreneurs. Over time, the authorities have changed their attitude towards foreign investment and began to gradually open up their sectors. However, 31 areas still remain closed to citizens of other countries. The film industry and tobacco production are also banned from investing.
If a foreign businessman plans to work in the medical sphere, he has to create a joint firm with Chinese partners, and the controlling interest will be owned by locals.
Opening up the automotive industry to foreign investment is an important step for the development of the sector. There are many companies in China that are interesting in terms of investment and have long been known in the market: Great Wall, SAIC Motor, Geely, and others. In addition, there are promising electric car manufacturers that have all the chances to enter new markets. And foreign investments will help in this.
According to official statistics, there are more than one million companies with foreign capital in China. During the current year, the volume of direct investment from individuals and legal entities from other countries has increased by almost 30% compared with the previous period. Analysts point out that the growth rate in this segment is a record for the past 10 years. Thus, China has every chance to achieve its goal of attracting foreign capital.
In 2021, the volume of foreign investment in the country amounted to 163 billion dollars, which exceeded the figures in the U.S., where 134 billion dollars were attracted.
In the first half of the year, China registered 23,000 new companies with foreign assets, up 48% from the previous year.
Attracting foreign funds in this volume is perceived rather optimistically, especially given the global trend of declining direct investment. Investment processes have been declining since 2020, including in the European Union. Here, investments in 17 countries, including Italy, Germany, and France, have decreased. In addition, investors’ interest in the U.S. has also decreased. Analysts believe the main factor of China’s attractiveness is the stability of the economy and its record pace of development, which was not prevented even by the pandemic.