Commentary: Why has China become the promised land for foreign investment?

China has overtaken the US as the world's top investment destination. During the January-April period, 14,533 new foreign-funded enterprises were established in China, a surge of 50.2 percent year on year.

People enjoy the view of Lujiazui at the Bund in east China's Shanghai, Aug. 2, 2019. (Photo/Xinhua)

The fact that the Chinese market has become a haven for international capital amid the global economic downturn caused by the COVID-19 pandemic is primarily because China's capacity for governance has withstood the severe test of the pandemic, fully demonstrating the country's institutional strength and resilience.

China's effective control of the epidemic and rapid resumption of work and production have dispelled the concerns of international investors. While quickly controlling the spread of COVID-19, the Chinese government has attached great importance to stabilizing foreign investment and foreign trade, having put forward a raft of policies to support foreign-invested and foreign trade enterprises on a priority basis to resume production and provide them with timely and effective assistance.

A survey released by the American Chamber of Commerce in South China found that over 93 percent of the 399 member companies surveyed believed that the Chinese government could provide effective assistance to enterprises.

China's social stability provides a basic institutional guarantee for market players to carry out their production and business activities. Even though some governments have encouraged companies to bring the manufacturing sector back home and have mulled about paying them to do so, foreign investment in China has nonetheless continued to soar, reflecting foreign-invested enterprises' recognition of and strong confidence in China's governance capabilities.

China's promise to open up wider to the world and improve its business environment has brought confidence to foreign investors regarding the country's development prospects.

The COVID-19 pandemic has increased the risks associated with global development, leading to a rise in protectionism, unilateralism, and de-globalization, as well as the institution of various barriers and the re-emergence of beggar-thy-neighbor trade practices.

Against such a backdrop, China has further expanded the scope and raised the quality of its opening-up, improving the structure, layout, institutions, and mechanisms for opening-up, and has adopted opening-up at a higher standard to generate high-quality development, injecting momentum into global economic governance and stabilizing the international flow of capital.

The country's foreign investment law and regulations on implementing this law took effect on Jan. 1, 2020, replacing all approval and registration requirements for the establishment of and changes to foreign-invested enterprises operating in the business field with an information reporting system.

On March 4, 2020, the Political Bureau of the Communist Party of China Central Committee held a meeting to promote efforts to expand the opening-up of finance and other services, sending a positive signal on advancing an orderly opening-up.

China's Measures for the Handling of Complaints from Foreign-invested Enterprises came into effect on Oct. 1, 2020, strengthening the protection of intellectual property rights for foreign investors from a legal perspective. Of particular note, the establishment of specialized courts as stipulated in the measures highlights the Chinese government's sincerity and determination to protect the intellectual property rights of foreign enterprises.

On Dec. 28, 2020, the National Development and Reform Commission and the Ministry of Commerce jointly released a new version of the catalog of industries that encourage foreign investment, which has 127 newly-added items and 88 modified items compared with the 2019 version, indicating the continued expansion of the investment scope for foreign investors.

The introduction and implementation of these policies to stabilize foreign investment have greatly improved China's business environment, making China the promised land for international capital.

Improved government services and greater market dividends have given foreign investors unique advantages. With the deepening of reforms to streamline administration, delegate power, improve regulations, and upgrade services in the field of foreign investment, China has been accelerating the transformation of government functions, improving the foreign investment service system and making the Chinese market more attractive.

China has improved the efficiency of government services by simplifying procedures, reducing costs and optimizing services for foreign-invested companies. It has increased resource supply capacities by setting up platforms, developing new models and adding new business scenarios. The country has also cut the time required for foreign companies to get a business license or other required licenses and permits via a single website or window that provides multi-agency services.

At the same time, China has strived to eradicate institutional obstacles through tireless reforms in 21 pilot free trade zones, reassuring foreign investors that they can receive a share of the market's dividends.

According to the World Bank's Doing Business report released in 2020, China ranked the 31st among 190 economies in the world in terms of doing business and was recognized as one of the top 10 most improved economies worldwide in terms of the ease of doing business for two years in a row.

The continuous improvement of the business environment in China is an important reason for the rapid inflow of foreign investment into the country.

The growth of foreign investment in China is an indication of international capital's confidence in the country's development prospects and the outstanding performance of the Chinese government's continuous efforts to modernize its governance capabilities. Meanwhile, foreign investors, who represent an important bridge between international and domestic markets, are most certainly expected to contribute to the sustained growth of China's economy and global economic recovery moving forward.