West propaganda campaign can’t demoralize foreign investors’ confidence in Chinese market

Published: February 23,2024

Opinion

By Lal Mia

People are shopping in a shopping mall, Huangpu district, Shanghai, Febuary 20, 2024. /CFP

Foreign investors are becoming interested in China for a variety of reasons, despite the West’s continuous media misinformation campaign about the alleged exodus of foreign investors from Chinese markets and the country’s diminishing foreign investment trend when medias in the West like Bloomberg reported with the headline “Foreign Direct Investment to China Slump to 30 Year Low” on February 18.

Beyond doubt, China has gained international attention for its thriving business environment and investment friendliness, which is understandable given the country’s numerous achievements and justifiable praise for its fast economic resilience.

There are many examples of how certain claims in the Western media about international businesses departing are completely contrived and untrue. International businesses are entering the Chinese market with a fresh spirit rather than departing from it. According to official Bundesbank figures examined by the IW institute, German direct investment in China surged by 4.3 percent to a new high of $12.7 billion last year. It also increased as a percentage of the nation’s total foreign investments. German direct investments in other Asian countries remained steady at around 8 percent last year, but China’s portion of Germany’s total foreign investments increased to 10.3 percent, the highest level since 2014.

Concerns are raised by the Reuters story that German businesses are still making significant investments in China despite pleas from the government to reduce their exposure. The issue now is, despite their government’s demotivational strategies, why do German investors keep increasing their stakes in China? The explanation is straightforward: they fully believe in China’s commercial potential.

The companies were aware that they needed to avoid being duped by U.S. anti-China hawk politics. German Chancellor Olaf Scholz is so confident in the Chinese market that, to solidify additional commercial dealings, he will go there on April 15–16 with a business group.

China moved up from 10 to 7 place in the Kearney Foreign Direct Investment (FDI) Confidence Index 2023,. For the first time in 25 years, China is now ranked first in an exclusive emerging markets FDI Confidence Index, giving business executives insight into the attractiveness of developing markets to investors. These figures confirm to international investors that foreign companies are still making significant investments in China despite slander from Western media. Regardless, evaluations of the Chinese market by Western media are often entwined with contrived storylines and political maneuvers intended to deflect investors’ focus. 

I thus see the spectacular story of change that the Western media outlets provide with full skepticism. The middle class is expanding in China as well. There are over 400 million middle-class Chinese people, who make up a younger, more diligent labor force. With its massive domestic market of 1.4 billion people, improved cross-border business environment, private sector development, eased cash inflows, and promising future manufacturing and hi-tech industries, China continues to be a popular region with strong purchasing power. It also enjoys boosts from preferential policies, secures intellectual and property rights, high-level opening up, high-quality living standards, and has a vibrant and innovative entrepreneurial culture.

German tourists walk in the Sino-German international style street, Shenyang, Liaoning Province, July 30, 2023. /CFP

Additionally, investors are backing up their claims with real funds. Promising industries in the nation include manufacturing, small and medium-sized enterprises (SMEs), engineering, renewable energy, high-quality infrastructure, high-tech manufacturing, power, information technology (IT), education, healthcare, digital economy, electronic information manufacturing industry, high-end manufacturing, new generation of information technology smart devices, cultural products, real estate business, shipbuilding, and services.

In 2023, China’s service and high-tech industries demonstrated resiliency, propelled by heightened demand from businesses and consumers, as well as government backing. With the government’s 21-point plan and loosened lending regulations, the real estate market showed indications of revival despite the slowdown in the real estate sector in 2023. The Economic Development Zones (EDZs) in China are contemporary industrial regions with distinct regulations and operations. Since the 1970s, more than 2,000 EDZs – including cross-border cooperation zones, high-tech EDZs, and ETDZs – have accelerated regional and national economic development by drawing foreign direct investment and improving technology. 

Chinese Premier Li Qiang emphasized the benefits of investing in China at the World Economic Forum Annual Meeting 2024. He emphasized the long-term positive trend of China’s economy and the country’s openness to foreign investment.

Leaders of 14 multinational companies including Walmart, JPMorgan Chase, Intel, BASF, Volkswagen, and Siemens, expressed confidence in China’s economic development and expressed willingness to deepen cooperation and contribute to its growth. 

China’s policymakers’ continuous willingness, support, and well-timed policies are expected to boost its attractiveness to global investors and attract more foreign businesses. Chinese policymakers are taking measures to expand market access and improve the business environment to stabilize foreign capital inflows. The Central Economic Work Conference in 2023 vowed to ease market access for telecommunications, medical, and other service industries. Analysts predict China will remain the world’s most attractive FDI destination in 2024, with more foreign investment expected to flow into the country as its economy recovers. 

These instances show that investors are still upbeat about the world’s factory and second-largest economy. China has become one of the world’s top investment destinations for millionaires. A greater portion of foreign capital is being invested in China by businesses because of the country’s economy’s steady recovery and robust growth. The positive outlook for foreign commercial activity is bolstered by the recent comprehensive measures implemented by the Chinese government. Its image as an investment-friendly country, China is now seen as a safe haven for investors worldwide. The West’s propaganda campaign can’t demoralize foreign investors’ confidence in the Chinese market’s potential. 

Lal Mia, a special commentator on current affairs for CGTN, is a freelance columnist, and researcher from Bangladesh.