(Li Changan) Don’t panic about the “theory of foreign capital withdrawing from China”

(Source: "Beijing News" Today's Headlines 2020-04-12)

Information video. Shanghai: A number of high-quality foreign investment projects have been launched. Customers believe that China’s economy will be good in the long term. Produced by our video from Beijing News

The COVID-19 epidemic has swept across the world and has had a considerable impact on the society and economy of various countries around the world. Against this background, some claims about "foreign capital withdrawing from China" have recently attracted attention in the domestic public opinion field.

According to public opinion, concerns about "foreign capital leaving China" are mainly based on the following news: White House economic adviser Larry Kudlow put forward a proposal to attract American companies to withdraw from China and return to the United States. He mentioned that one policy that may attract U.S. companies to return to China is to directly expend 100% of the repatriation expenses and pay for the costs of U.S. companies leaving China to encourage them to return to the United States as soon as possible.

In addition, according to policy details announced by the Ministry of Economy, w88 and Industry of Japan, the country plans to spend 220 billion yen (approximately RMB 14.3 billion) of the costs required to "reform the supply chain" to fund Japanese companies to transfer production lines back to Japan, and 23.5 billion yen (approximately RMB 1.5 billion) to fund Japanese companies to transfer production to other countries to diversify their production bases.

For a time, the topic of whether foreign investment will withdraw from China has caused some people to worry. But this is not necessary.

First of all, it should be noted that there have always been cases of some foreign capital withdrawing from China. It is normal for companies to leave and stay. When some foreign capital withdraws from China, other companies "come in" at the same time.

In addition, judging from past experience, the so-called "foreign capital withdraws from China" and other statements have false information, and it is difficult to distinguish between true and false. This time is no exception. For example, in the relevant documents of the Japanese government, the relevant statement is, "If companies move the production capacity of parts and raw materials that are highly dependent on a country back to Japan, the government will provide subsidies." Among them, there is no mention of words such as "evacuating China." Some people are over-interpreting it.

In fact, judging from the situation in China, worrying about "foreign capital withdrawing from China" may not be consistent with the facts.

China is one of the largest recipients of foreign direct investment in the world. As China's technological level and manufacturing industry upgrade, China's talent and market space continue to increase. The fact that Tesla and other world-renowned companies have built factories in China is proof of this.

Although the epidemic has had a certain impact on my country's introduction of foreign capital, and many investment projects have been forced to be postponed, on the one hand, it should be noted that this is a global impact. China is not the only one affected by the epidemic. The epidemic will inevitably lead to the reshaping of the global value chain.

On the other hand, stabilizing foreign investment has been one of the important measures to stabilize growth in my country for some time. Especially after the outbreak of the COVID-19 epidemic, the Chinese government promptly launched a series of large-scale policies to stabilize foreign investment and foreign w88, including promoting the resumption of work and production of foreign-invested enterprises, promoting the implementation of policies to stabilize foreign investment, improving the level of investment promotion and investment promotion, and continuing to optimize the foreign investment environment. It has become the "stabilizing needle" for stabilizing foreign investment. The effects of these "combinations" of policies to stabilize foreign investment are showing.

Moreover, for now, my country's industrial chain has basically recovered, which will also help enhance the confidence of foreign investment. A survey report by the American Chamber of Commerce in China shows that 55% of the companies surveyed believe that it is too early to judge the impact of the epidemic on corporate business strategies in 3-5 years; 34% of companies believe that there will be no impact; 63% of the companies surveyed intend to expand investment in China in 2020. In fact, in recent years, China has been one of the countries that attracts the most foreign investment. In 2019, China's global ranking of business environment improved from 46th to 31st. Under this premise, rational foreign-funded enterprises will not give up on China.

From this point of view, there is no need to worry about "foreign capital withdrawing from China". China's market environment and long-lasting foreign investment stabilization policy have been providing a solid foundation for foreign investment to enter China, and in the long term, this will only strengthen, not weaken.

In fact, from the nature of capital, capital always flows in the direction of easy profit. It does not mean that if some countries force foreign capital to withdraw, companies will automatically comply. Whether it is the United States, Japan, or other countries, China's huge market size, complete industrial chain, and especially the continuous improvement of the business environment are becoming the most favored investment place for global capital. There is no reason for foreign capital to withdraw.

So, on the whole, there is no need to panic about the so-called "foreign capital leaving China". As long as we maintain strategic focus, further improve the business environment, and continuously consolidate China's position in the global value chain, the attraction to foreign capital will continue to increase, and we do not have to worry about foreign capital leaving China.

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