China's recent 20-point action plan, along with high-level backing for private enterprises, sends a clear signal of the country's intent to attract foreign investment, opening up key sectors like telecom and healthcare, and deepening its integration with global markets, economists said in a recent interview with China Global Television Network (CGTN).
On Wednesday, China's State Council unveiled the 20-point action plan, aimed at stabilizing foreign investment for 2025. The plan includes measures to ease restrictions for foreign companies and expand access to sectors such as culture, education, biomedical, healthcare, and telecommunications.
Earlier this week, Chinese President Xi Jinping met with leading private entrepreneurs, sending a positive message of support for the private sector.
Hong Hao, chief economist at Grow Investment Group, emphasized the pivotal role of private enterprises in China's economy, contributing more than 60 percent of gross domestic product (GDP). However, he pointed out that these enterprises struggled to expand at the necessary pace due to a lack of credit support following the pandemic.
"So, in recent days, we have a top-level conference with private entrepreneurs. And also, we have new policies from the PBOC (People's Bank of China), they're trying to shore up credit support for private enterprises. And then now we have this 20-point detailed plans for them. So I think they're sending out a very strong policy signal to the entrepreneurs from the top, saying that their status in the economy is very important and they're going to receive all the support they are going to get,” Hong said.
The action plan also reflects China's push to welcome foreign investment into sectors like telecommunications, biotechnology, and wholly foreign-owned hospitals. Hong emphasized that these sectors are in vital need of new capital, and that foreign investment could help address these challenges.
"That explains why a very strong move in the telecom sector and also in the healthcare sector today. I think China can benefit from foreign investments in the sense that these are the areas that really need new capital investment. I think right now much of the Chinese capital is still tied up in the property sector and also in the infrastructure area. I think the AI area and also the semiconductor area are [some] of the areas that have received very strong recent attention from the top. And I think this time, we're opening up further, it also welcoming foreign investors to come into these areas. It's also a show of policy signals from the top regarding the support for foreign investment to continue investing in the Chinese economy," Hong said.
In addition to attracting foreign capital into key industries, the Chinese government is looking to expand investment into less developed regions such as central, western, and northeastern China.
Johan Annell, partner at ARC Group, stressed that local governments have a crucial role to play in attracting foreign investment. He suggested that good governance and strong customer relationships are vital for attracting investments.
"One thing is the basic of good governance and companies being there, really seeing that here rules are very well implemented, things just work, and that is one thing. Another is to buy more products from Europe to help make that happen. Seeing that the first step towards getting investments is actually to help companies find customers and collaborations. Once you have sales, that's a very strong reason to actually put manufacturing and also R and D development there. Seeing that you're close to your customers and in one of those clusters where that really pulls investment," Annell said.
Official data released in January showed that China attracted a total of 97.59 billion yuan (about 13.4 billion U.S. dollars) in foreign direct investment (FDI), although this represents a 13.4 percent decline from the previous year.
However, the country saw a significant month-on-month growth of 27.5 percent, with countries like the United Kingdom and South Korea leading the way in FDI growth. Hong explained the factors behind the rise in investment from these countries.
"I think the non-US part of the foreign investment is actually picking up. I think South Korea has been one of the more important foreign investors in China for many years now. And I think last year's pickup also reflects the fact that, the South Korean companies see a better integration of the Chinese economy over the next few years. Regarding to UK, there are many of the manufacturing opportunities being set up here in China, either trying to supply the rest of the world with automobile parts, for example, semiconductors, mid- to lower semiconductor chips, and many other things. So, that is one of the reasons why it's driving up UK business as well," Hong explained.
China's 20-point plan signals support for foreign investment, private sector: economists
China's 20-point plan signals support for foreign investment, private sector: economists
