FDI, 'fast track' program point to confidence

Global business leaders eager to resume work in Chinese cities amid promising recovery

Inspired by German airline Lufthansa's flights carrying hundreds of German business executives and engineers and their families from Frankfurt Airport to Chinese cities including Shanghai, Tianjin and Qingdao since May, the governments and business chambers on both sides are receiving many corporate requests for similar flights to other Chinese cities.

Although such passengers had been in their hometowns across Germany during China's Spring Festival holiday, which began in late January, they had not expected they would be kept at home so long due to the novel coronavirus outbreak, and they are eager to make up for lost time in working with colleagues in China, said Jens Hildebrandt, executive director of the German Chamber of Commerce in North China.

Such "fast track" arrangements since May between China and countries including Germany, Japan and Singapore also allowed South Korea to fly more than 1,200 company managers and technicians to locations across China in the past two months.

Apart from having more foreign business leaders and experts returning to China, the country saw foreign direct investment rise 8.4 percent on a yearly basis in the second quarter of the year, despite increasing external uncertainties amid the COVID-19 pandemic, the Ministry of Commerce said.

FDI inflows expanded 7.1 percent year-on-year to 117 billion yuan ($16.7 billion) in June, according to the ministry's data－another sign of foreign investors' stabilizing expectations and confidence in the country's economy.

In addition to having supply chains that are reliable and relatively less vulnerable to disruptions, China enjoys the advantages of economies of scale, consumption potential, a fast-growing digital economy and competitive labor costs. This makes supply chains in the country scalable, extendable and cost-effective, said Zhang Xiaoqiang, executive vice-chairman of the Beijing-based China Center for International Economic Exchanges.

With China's auto market maintaining recovery momentum over the past two months, Saint-Gobain SA, a French industrial conglomerate, will begin operating a new automotive glass plant by partnering with Guangzhou Automobile Group Co in Meizhou, Guangdong province, starting in April, said Javier Gimeno, the group's senior vice-president.

The annual production volume of this manufacturing facility, which will see 620 million yuan of investment, is expected to reach 1.18 billion yuan, a notable step in solidifying the company's market presence in southern China.

Gimeno said that in terms of post-pandemic economic recovery, the group is confident about the recovery and growth of its business in China.

"China will remain a competitive supply chain choice for Saint-Gobain, as it has a broad spectrum of strong upstream suppliers and downstream clients," he said. The company is also looking forward to greater investment and development in research and development as well as production and sales, and has great expectations for the recovery of China's economy and the continuous improvement of its investment and business environment, Gimeno added.

Peter Tichauer, an administrator at a Sino-German industrial park in Qingdao, Shandong province, said many new areas have been opened to global capital as China has become increasingly open. He said recent chartered flights of senior German executives to China not only reflected the close economic ties between the two countries, but also showed that the two countries are working hard to maintain the stability of industrial and supply chains.

Since China is eager to steer the economy toward innovation and technology-driven, high-quality growth through effective reforms, German auto giant Volkswagen AG spent 1 billion euros ($1.17 billion) in late May to acquire a 50-percent stake in a subsidiary of Anhui Jianghuai Automobile Group Corp, or JAC.

The German carmaker will increase its stake in the joint venture JAC Volkswagen to 75 percent from 50 percent soon, marking the first case of foreign capital being involved in the mixed-ownership reform of a State-owned automaker in China.

In the face of a complex and severe world economic situation with growing uncertainties, the Ministry of Commerce noted that FDI from the United States jumped 6 percent on a yearly basis, and that from Singapore rose 7.8 percent year-on-year between January and June, while inflows from countries and regions related to the Belt and Road Initiative expanded 2.9 percent.

While some observers have been concerned about a possible capital retreat because of trade tensions with the United States, China has maintained a key position in FDI in the view of global investors, said Wang Yu, global partner of Kearney, the US-based management consulting firm.

In addition to US companies such as ExxonMobil, Honeywell, Tesla and Walmart's big-ticket investment projects in China, Coca-Cola Co also reported an encouraging performance in the second quarter on the back of business in the Chinese market and an improving global environment, although its quarterly revenue fell 28 percent.

The State Council, China's Cabinet, which is eager to restore and enrich the country's developing ability, issued a guideline on July 21 to further improve the business environment and better serve market entities across the country.

The document stresses six categories of policies and measures, including more streamlined and efficient approval procedures for construction projects and their financing; easier approval processes and conditions for enterprises generally; and an optimized business environment for foreign trade and investment.

Yang Hongcan, head of the business registration bureau at the State Administration for Market Regulation, said the government will take steps to further lower the market-entry threshold for the education, medical services and sports sectors. All unreasonable barriers will be removed, Yang said.

In addition, operational and investment barriers to foreign-invested and foreign-trade enterprises in lower-tier cities will be removed, Yang said.