Lujiazui, the financial center in Shanghai, forms a perfect backdrop to the Bund area. (WANG GANG/FOR CHINA DAILY)
China will remain a hot investment destination for multinational corporations seeking to expand manufacturing and innovative businesses in the coming years, said executives of foreign businesses on Tuesday.
MNCs, they said, will prefer China because of its highly concentrated supply chains, close global linkages and lucrative domestic market.
Despite challenges caused by the Omicron variant of COVID-19 in certain cities, especially during the second quarter, China's GDP expanded 2.5 percent in the first half of this year, showing that temporary economic disruptions will not undermine the country's ability to attract global investors in the long run, they said.
Many parts of the world are facing bouts of volatility due to the Russia-Ukraine conflict, soaring food and energy prices, and a sluggish economic recovery. In contrast, China has been strengthened by solid economic foundation and resilience. The country has largely kept its consumer prices stable and facilitated the operation of global supply chains in the first half of this year, said Chen Wenling, chief economist of the Beijing-based China Center for International Economic Exchanges.
According to the Ministry of Commerce, foreign direct investment in the Chinese mainland, in actual use, expanded 17.3 percent year-on-year to 564.2 billion yuan ($83.61 billion) in the first five months of the year.
Big-ticket projects invested by Germany's Volkswagen Group and BMW Group, South Korean steelmaker Posco and US retail giant Costco had all been implemented well in China in the first half, generating strong impetus for the rapid growth of FDI, the ministry said.
Echoing the positive sentiment, Xu Yang, president of the China unit of Danfoss Group, a Danish engineering company, said these facts have boosted global companies' confidence to further invest in the country. China's reinforced protection of intellectual property rights has also emboldened global companies to help the country evolve from a manufacturing base into an innovation base, he said.
Danfoss said it will ship more products made at its plants in China to other signatory countries of the Regional Comprehensive Economic Partnership agreement in the future. It will also invest 300 million yuan later this year to build new manufacturing facilities in Tianjin, to support its growth in the Asia-Pacific region.
Driven by both domestic and foreign automakers' orders in China, especially the nation's new energy vehicle makers, German conglomerate Thyssenkrupp began to build a new plant in Kunshan, Jiangsu province, last week to expand its auto body business in the country.
China is already the world's largest auto market, and the popularity of new energy vehicles and the rise of local auto original equipment manufacturers, or OEMs, are injecting new vitality into this market, said the German company.
"We hope that by further strengthening local capabilities and resources, we can not only better serve the local needs of our global customers, but also better meet the domestic market and emerging customers' needs and expectations," said Gao Yan, CEO for China at Thyssenkrupp.
The Kunshan unit entails an investment of 8 million euros ($8.1 million), and will start operations in December this year, a further expansion of the group's automotive business after investing in damper manufacturing business in Changzhou, another city in Jiangsu province, in 2021.
Yin Zheng, executive vice-president of French multinational Schneider Electric SA and president of Schneider Electric China, said the ongoing energy transformation in China and its carbon neutrality pledge present opportunities for global companies. The group will continue expanding its market presence in the country's clean energy and smart manufacturing sectors to support China's carbon neutrality ambitions.
"The major approaches we recommend to businesses to address the issue include using new energy, improving energy efficiency, electrification and circular economy," he said, adding digital technology is also key as it can improve production and energy efficiency, promote wider use of new energy, accelerate electrification and bolster circular economy.