The rapid growth of the Chinese economy and its technological upgrades have explained the very dynamic inflows of foreign direct investment (FDI) in China, British academic John Ross has said.
The Chinese economy is growing more rapidly than any other major economy in the world, and this is obviously making China extremely attractive as a market for investors, Ross, senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China, said in a recent interview.
"It used to be the case that FDI came into China primarily to then export. But now we have a situation where the most important FDI goes into China and takes advantage of the Chinese market," said Ross, also former director of Economic and Business Policy of London.
Having studied in China for many years, Ross pointed out that China has been going upmarket technologically during the opening-up.
"The high-tech sector is growing even more rapidly than the overall FDI," said Ross, citing China's FDI data in 2021.
The FDI into the Chinese mainland, in actual use, expanded 14.9 percent year on year to a record high of 1.15 trillion yuan (about 182 billion U.S. dollars) in 2021, and high-tech industries saw FDI inflows jump 17.1 percent from a year earlier, China's Ministry of Commerce said in January.
"What is taking place is an overall upgrade of the whole technological base of the economy, which has been taking place over decades, and which will continue," said Ross.
As China further relaxed its foreign investment rules, Ross said he believes China has been progressively opening up its economy, and it is a win-win situation for both China and foreign investors.
The Chinese companies are clearly competing very well during the opening-up process, which will bring a more favorable environment for foreign investment in the country, he said.
Ross also refuted the criticism calling on foreign companies to leave or not to invest in China anymore, saying the most important thing is "simply to look at the fact."
Concerning China's anti-COVID response and its economic recovery from the pandemic, Ross said "China has dealt with the pandemic very well."
Saving people's lives is always the top priority, he said, "China dealt with it quite successfully and this therefore helps its economy to rebound quickly."
"The results show that because the economy grew very quickly, this makes it much more attractive to FDI," said the economist.