China fosters new foreign trade drivers, optimal investment environment

BEIJING - With global trade forecast to underperform in 2023 and cross-border capital flow fluctuations drawing widespread concern, China is fostering new drivers to consolidate its status as a leading trader as well as a favored destination for foreign investors.

In the face of global economic fragility, guest speakers at the third episode of the China Economic Roundtable, an all-media talk platform hosted by Xinhua News Agency, dwelled upon how China prepares to strengthen its trade with global partners, its efforts to boost the confidence of investors, and the profound implications these factors will have on global trade and investment.

New drivers of foreign trade

In a December forecast, the United Nations Conference on Trade and Development (UNCTAD) said that the outlook for 2024 remains "highly uncertain" and "generally pessimistic," and predicted that global trade in 2023 would fall by around 5 percent compared to the 2022 level.

Ongoing geopolitical tensions, lower demand in developed countries, an uptick in trade-restrictive measures, commodity price volatility and lengthening supply chains were among the factors weighing on trade, UNCTAD warned.

In the face of these challenges, China, the world's second-largest economy and the biggest goods trader, has been striving to tap into new trade potential. China's Central Economic Work Conference held in December emphasized fostering new drivers of foreign trade by expanding trade in intermediate goods, trade in services, digital trade and exports of cross-border e-commerce.

Chinese customs data shows that the nation's exports and imports reached 37.96 trillion yuan (about $5.35 trillion) in the first 11 months of 2023, staying flat from the same period in 2022, while exports alone hit 21.6 trillion yuan, up 0.3 percent year-on-year.

"Under such circumstances, China's foreign trade has maintained both stability in terms of scale and growth in exports," according to Zhang Wei, vice-president of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce (MOC).

Zhang highlighted China's exports of three major tech-intensive green products -- solar batteries, lithium-ion batteries and electric vehicles -- which have maintained rapid growth, saying that services trade, digital trade, cross-border e-commerce and intermediate goods trade are rising.

"I think the rapid growth of these new trends reflects the fact that China's foreign trade remains very resilient and competitive," Zhang said.

Utilization of foreign investment

China attaches great significance to foreign direct investment (FDI), given its huge contribution to advancing the nation's economic and social development.

Zhu Bing, director of the MOC's department of foreign investment administration, said that China, through the recently held central economic work conference, has sent a positive signal of expanding opening up and attracting foreign investment.

As an outcome of the conference, foreign investment's market access in service industries such as telecommunications and healthcare will be further relaxed. This came after the country announced in October 2023 that it would remove all restrictions on foreign investment access in the manufacturing sector.

"This will stabilize foreign investors' expectations," Zhu said, adding that the assurance and firmness of China in opening up and attracting foreign investment will provide much-needed certainty in the face of the unpredictability in today's world.

Government data shows a 10-percent decline in actual FDI into China in the first 11 months of 2023. Zhu said that despite the drop, FDI in China during the period still managed to top 1 trillion yuan and remained at a high level. "It is normal for the scale of foreign investment to fluctuate. There are various reasons for this, including both economic and non-economic factors," Zhu explained.

He listed factors such as the impact of the COVID-19 pandemic that might have caused a lag in investment data, bearing in mind the long cycle of investors' investment decisions, geopolitics and the overall shrinkage in the scale of global FDI, which fell to $1.3 trillion in 2022, down by about 12 percent year-on-year, according to UNCTAD data.

Optimizing business environment

During their discussions at the Roundtable, Zhu said that stability, fairness, transparency and predictability are important criteria for assessing a country's business environment, and the Chinese government strives to provide investors with all these.

"We very much welcome multinational companies and small and medium-sized enterprises from overseas to invest in China," Zhu said, adding that the cooperation between these enterprises and domestic ones is an important new way for foreign investment to enter the Chinese market.

"Optimizing the business environment should include several areas, including investment liberalization, facilitation, promotion and protection, on which China's Foreign Investment Law has made very clear specifications and requirements," he said.

"We are doing a lot to facilitate investment, and approval procedures are being simplified. In terms of investment promotion, local governments are also increasing their efforts. In the post-pandemic era, cross-border travel has also become easier," he said.

In a recent move to boost international exchanges, the country started to implement a unilateral visa-free policy for ordinary passport holders from France, Germany, Italy, the Netherlands, Spain and Malaysia on a trial basis, effective from Dec 1, 2023 to Nov 30, 2024. The move allows holders of ordinary passports from the six countries to enter China visa-free for business, tourism, visiting relatives and friends, and transit, for a period of no more than 15 days.

During the discussion, Zhao Yugang, an official with the Shanghai Pilot Free Trade Zone management committee, also shared the good practices of the zone, which celebrated its 10th anniversary in 2023. "The Shanghai Pilot Free Trade Zone has made breakthroughs in investment management, trade facilitation, financial innovation and government-function transformation," Zhao said.

Through these efforts, more than 84,000 companies were registered in the Shanghai Pilot Free Trade Zone and the actual FDI reached $58.6 billion over the past 10 years, Zhao said.

"In terms of investment management, we have released China's first negative list for foreign investment access and taken the lead in implementing the negative list system. In terms of trade facilitation, we have also established the nation's first single-window platform to facilitate trade activities," Zhao said.

Zhang Wei added that in the past 45 years, opening up has played an important role in China's economic development. "In the future, we also hope to give full play to the leading role of high-level opening up to drive China's economy forward."