The Current Situation of Foreign Direct Investment

外商投资现状

国家外汇管理局于11月3日发布的中国2023年第三季度外商直接投资净值为负。商务部统计报告显示，在去年和今年全球直接投资持续萎缩的背景下（去年全球外国直接投资下降了12%，今年OECD公布的2023年上半年数据同比下降了30%），今年前三个季度中国实际使用外资同比下降8.4%。报告指出，在美元升息的背景下，外商直接投资净流入规模明显减小。总体而言，尽管外商投资者对中国市场观望态度较强，商务部强调中国经济的潜力和吸引力，认为通过改革和提升营商环境，中国将继续吸引更多外资。

New Policy Orientation on Improving Foreign Investment Environment

President Xi emphasized in his speech at the opening ceremony of the Third Belt and Road International Forum on October 18, 2023, that the Chinese government's decisions to support an open world economy include initiatives such as establishing the 'Silk Road E-commerce' cooperation pilot zones, signing free trade agreements and investment protection agreements. He highlighted the comprehensive removal of restrictions on foreign investment access in the manufacturing sector, advancing cross-border trade in services and opening up to investment. The speech also underscored support for the development of foreign-invested enterprises in sectors such as advanced manufacturing, modern services, and digital economy, etc.

Confronted with increasingly challenging economic pressures, the Chinese government has recently implemented a series of proactive policies to enhance the foreign investment environment. For instance, by the end of November, the State Council had given its initial approval to the 'Work Plan Supporting Beijing in Establishing he National Service Industry Demonstration Zone and Expanding Opening Up.' This move signifies Beijing's launch of the most extensive opening-up measures, covering a wide range of sectors, including telecommunications, healthcare services, finance, culture and education, professional services, digital economy, as well as trade and investment.

At the end of November, the Beijing Municipal Government conducted the first review of the 'Draft Regulations on Foreign Investment in Beijing,' with a particular emphasis on facilitating the seamless cross-border flow of data and funds for foreign enterprises. The objective is to enhance investment environment, incentivize foreign investments in strategic emerging industries, and support the establishment of regional headquarters within the city. Additionally, the State Council recently issued the 'Comprehensive Plan for Advancing Shanghai Pilot Free Trade Zone's High-level Institutionalized Opening, Fully Aligning with International High-standard Economic and Trade Rules', aiming on expediting the expansion of services trade, fostering high-level openness in critical sectors such as finance and telecommunications, streamlining cross-border investment and financing, as well as endorsing the establishment of fund management centers by multinational corporations.

The Political Bureau of the CPC Central Committee held a meeting on December 8 to set the general tone of economic work in 2024: "Enhancing opening up to outside, fortifying foreign trade and investment, propelling high-quality development, and aspiring to become a technological powerhouse. In the realm of macro policies and economic development, there is a proposal to cautiously reinforce proactive fiscal measures, with a focus on expanding domestic demand, bolstering the resilience and security of industrial and supply chains, and advancing ecological and green, low-carbon development. After three days of market fluctuations, China's blue-chip shares showed a marginal uptick, increasing the likelihood of a market reversal this week. Following the Central Political Bureau meeting, an economic work conference will be convened, and these two pivotal meetings are expected to chart the course for future policy directions, exerting a critical influence on reshaping market expectations.

中共中央政治局于12月8日召开的会议内容，涵盖了对2024年经济工作的总体要求：加强对外开放，巩固外贸外资基本盘，推动高质量发展，科技强国。宏观政策和经济发展方面，提出适度加力积极的财政政策，着力扩大内需，提升产业链供应链韧性和安全，深入推进生态建设和绿色低碳发展等。沪深两市连续三日震荡，之后小幅上涨，本周变盘的概率就更大了。政治局会议后，将召开经济工作会议，这两大会议将指明未来政策方向，对扭转市场预期十分关键。

Why China’s economy will continue to grow

中国经济为何会持续增长

According to the latest report from McKinsey, China's consumer market is entering a new era. Consumer data from the 2nd and 3rd quarters indicate that the era of double-digit growth in China's retail industry has come to an end. Retail sales in the third quarter increased by only 3%, and the recent ‘Double 11’(Singles’ Day) sales showed a mere 2% growth compared to the same period last year. This deceleration is evident in categories such as cosmetics (3%), clothing (4%), and home appliances (0.8%). Consumer confidence remains near historic lows since April. During the 'Double 11’, some categories experienced growth driven by discounts and promotions, while others declined. Live streaming played a crucial role, with traditional e-commerce experiencing a slight decline, while live streaming grew by approximately 20%. High-end brands performed well, with some brands lowering average selling prices amid intense promotional activities. Analysis indicates that success is closely linked to innovation and flexible responses to market dynamics.

根据麦肯锡的最新报告，中国消费市场正在进入一个新时代。第二和第三季度的消费数据表明中国零售业的两位数增长时代已经结束。第三季度商品零售额仅增长了3%，而最近的“双十一”购物节仅比去年同期增长了2%。这种放缓包括化妆品（3%）、服装（4%）和家电（0.8%）等类别。消费者信心方面，维持在自4月以来的历史最低水平附近。双十一受到折扣和促销的推动，某些类别经历了增长，而其他类别则下降。直播在其中发挥了重要作用，传统电商略有下降，而直播则增长了约20%。高端品牌表现出色，部分品牌在激烈的促销活动中降低了平均售价。分析显示，成功与创新和对市场动态的灵活响应密切相关。

The report maintains a cautiously optimistic outlook for the future of the Chinese economy, anticipating robust growth in the retail sector, positioning China to become the world's largest growth market. Driven by urbanization and rising income levels, the number of mid to high-income households and affluent urban centers is expected to increase in the coming years. The service industry, particularly in the realms of tourism and entertainment, ranks high in growth rates according to McKinsey's recent survey of Chinese consumers. After years of constrained mobility, there is a renewed enthusiasm for travel and socializing in restaurants and bars. The catering industry has shown robust growth, with a 19% increase reported to date, marking a 14% YoY growth in the 3rd quarter compared to 2022.

The commentary also points out that if China no longer relies on the real estate industry, the country's economic growth will hinge on the green economy and digital economy. According to data from private equity firm KKR, these two sectors contributed 4.7% to China's GDP growth rate in 2022. China holds a leading position globally in industries representing the Fourth Industrial Revolution, such as green energy, digitization, industrial robotics, and artificial intelligence. Even the prolonged China-U.S. trade tensions have not hindered China's growth, as bilateral trade reached a historic high of around $700 billion last year. Lastly, China continues to undergo automation and urbanization. Despite facing challenges like an aging population, its long-term growth is not expected to be significantly constrained.

评论还指出，如果不再依赖房地产行业，中国经济的增长将依赖于绿色经济和数字经济。根据私募股权公司KKR的数据，这两个领域在2022年对中国GDP增长率的贡献率达到了4.7%。中国在绿色能源、数字化、工业机器人、人工智能等代表第四次工业革命的行业中处于世界领先地位。即使长时间的中美贸易战也没有抑制中国的增长，中美贸易在去年达到了约7000亿美元的历史新高。最后，中国仍在进行自动化和城市化，虽然面临人口老龄化等挑战，但其长期增长不会受到明显限制。