With unwavering allure, China remains top-notch choice for global investors

BEIJING -- In a year marked by rising protectionism and "decoupling" attempts in the world economic arena, what has become of China's allure as a favored investment destination? Foreign enterprises' bullish moves have told a lot about it.

As 2024 draws to a close, a recent landmark investment decision by French pharmaceutical giant Sanofi has emerged as a compelling testament to global investors' consistent faith in the Chinese market.

In early December, the company announced a plan to invest nearly 1 billion euros ($1.04 billion) in establishing a new insulin production base in Beijing. This will be Sanofi's largest single investment in China since entering the country in 1982.

Sanofi has not been alone throughout this year in ramping up its commitment to the Chinese market. In the first eleven months, a record 52,379 foreign-invested companies were established in China, up 8.9 percent from the previous year, according to the Ministry of Commerce. In November, foreign direct investment in the Chinese mainland in actual use climbed 6 percent year-on-year.

The influx of investors serves as a reality check for many China skeptics, who have spread a narrative of foreign companies fleeing the Chinese market en masse. But what allows China to maintain its pull for global investment?

A key magnet is China's industrial system, which is the most comprehensive on a global scale and offers unparalleled supply chain advantages. It is the only country in the world with every industrial category classified by the United Nations, with its manufacturing added value constituting roughly 30 percent of the global total.

The country's supply chain advantages for foreign investors present immense growth opportunities. Coupled with a vast consumer market of 1.4 billion people, the country remains a crucial destination for global investors.

Michael Hart, president of the American Chamber of Commerce in China, recently shared his insight with Xinhua on why he does not believe that most foreign companies will leave the country. "One, they have invested in supply chains and built them up with their suppliers. Number two, there are no quick, easy replacement markets."

Recognizing China's market potential and supply chain benefits, German optics giant ZEISS inaugurated a research and development (R&D) and manufacturing site in Suzhou, an industrial hub in east China, this year. Maximilian Foerst, president and CEO of ZEISS Greater China, said the site is a milestone in the company's efforts to localize R&D and expand its high-end product portfolio.

China is a crucial sales and manufacturing base and an integral part of the company's global business, said Foerst. He noted that the company has full confidence in China's outlook and is committed to long-term investment in the country.

As China pursues an innovation-driven growth model, the country's prominence in the global innovation landscape continues to increase. The Global Innovation Index 2024, released by the World Intellectual Property Organization, ranks China 11th among the world's most innovative economies, up one spot from the previous year. This makes China one of the fastest risers over the past decade.

Riding the wave of China's innovation drive, ACWA Power, a Saudi Arabia-based electric power generation company, announced in October that it will establish a global innovation center in Shanghai. The center will focus on new technologies and products in areas such as photovoltaics, wind power and green hydrogen.

Lyu Yunhe, executive vice-president of ACWA Power, said China's supply chain companies in the renewable energy sector possess advanced technologies and competitive solutions. Establishing an innovation center in China will support the company's global strategy and project development, he added.

To better allow foreign investors to leverage its advantages in supply chain, market and innovation, China has taken strides in further opening up this year. Throughout 2024, the Chinese government has unveiled an array of key measures designed to foster a more welcoming environment for global investors. These measures range from expanding access to key industries to initiating pilot programs that facilitate foreign investment.

One of the key moves was the roll-out of the 2024 national negative list for foreign investment, effective Nov 1, which removed all market access restrictions for foreign investors in China's manufacturing industry. This unprecedented breakthrough scraps the last few hurdles for global manufacturers entering a pillar industry of the world's second-largest economy.

In addition to traditional growth drivers such as manufacturing, China is expanding its opening-up endeavors to the service sectors. In October, a pilot program was launched to allow foreign investors to operate wholly-owned businesses in value-added telecom services, such as internet data centers, and engage in online data processing and transaction processing. This program also grants greater access to cloud computing services and computing power service markets.

To share with foreign investors the burgeoning opportunities arising from its population's increasing healthcare demands, the country announced a plan to further open up market access in its medical sector in September. A significant part of this plan is that hospitals wholly owned by foreign entities are now permitted to operate in China. Earlier this month, the first wholly foreign-owned, third-grade general hospital in China's history was officially licensed to provide medical services in the northern port city of Tianjin.

As 2025 approaches, China is setting its sights on elevating its opening up to a higher level, building on decades of reform efforts aimed at increasing market openness. During the annual Central Economic Work Conference held this month, Chinese leaders identified "expanding high-standard opening up while keeping foreign trade and investment stable" as one of the key priorities for the Chinese economy in 2025. Notably, the meeting decided to expand "voluntary and unilateral opening up" in an orderly manner.

"This means that China will embrace a more proactive strategy toward opening up," said Zhang Wei, vice-president of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, when commenting on the decision.

As part of its agenda for the next year, China will expand the pilot programs in opening up such fields as telecommunications and healthcare while steadily advancing the opening of service sectors, including the internet and culture, according to the Office of the Central Committee for Financial and Economic Affairs.

Zhang added that China would be more committed to building an institutional system that aligns with high-standard international economic and trade rules. "By improving the business environment and enhancing the transparency and predictability of policies, China will create a more level playing field for companies from home and abroad."