On Sunday, China’s National Development and Reform Commission and the Ministry of Commerce released the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition). The total number of items on the negative list, or restricted sectors for foreign investment, has been reduced from 31 to 29, and all restrictions on foreign investment in the manufacturing sector have been lifted. This means that going forward, foreign investment in China’s manufacturing sector will face no restrictions that differ from those applicable to domestic investment. In addition, the Ministry of Commerce, together with the National Health Commission and the National Medical Products Administration, recently issued a circular on further expanding pilot programs for opening-up in the medical sector. Some media outlets referred to these two bold opening-up measures as “two major developments in one day.”
The further easing of foreign investment access demonstrates China’s unwavering commitment to promoting investment liberalization and facilitation, as well as its responsibility in advancing global openness and cooperation. Frankly speaking, the current global investment environment is far from ideal. The recently released Chinese version of the World Investment Report shows that global foreign direct investment (FDI) dropped by 2 percent in 2023. If transit hubs for foreign investment are excluded, global FDI has declined by more than 10 percent for the second consecutive year. While investment liberalization and facilitation expand the economic pie, some major countries that should be leading this effort are clearly falling short. News headlines in those countries frequently focus on various restrictions they adopt. As the world’s second-largest economy, China firmly stands on the side of openness, proactively widening the doors of opening-up. This not only offers substantial support for economic globalization but also serves as a significant boost to global confidence.
Attracting investment is a hallmark of China’s opening-up. In the early stages of the reform and opening-up period, foreign investment in China was primarily attracted by low-cost advantages such as land, labor, and energy. However, foreign investors now continue to be optimistic about China due to its massive market size, high-quality labor force and comprehensive industrial chain, which have been developed over decades of growth, as well as the high-quality business environment fostered by China’s high-level institutional opening-up. These advantages are more sustainable and reliable.
Since China released its first negative list for foreign investment in 2013, it has undergone several revisions and reductions over more than a decade. This reduction is not simply a matter of crossing off items on a list; each reduction signifies a more open sector. While these sectors may face fiercer competition, they also present significant opportunities. China continues to make “subtractions” in terms of foreign investment access while making “additions” to the business environment. Foreign investors can share the dividends of an open China, and Chinese enterprises that can withstand the competition will emerge stronger. Confidence in opening-up has become a firm consensus throughout China. Regardless of changes in the external environment, China’s commitment to the logic of opening-up has remained unwavering.
From promoting the integration of domestic and foreign trade, optimizing the business environment at ports, to deepening the opening-up of the service industry and advancing the high-quality development of the Belt and Road Initiative cooperation, China’s steps toward opening-up to the outside world have been bold while maintaining stability. In addition, China’s ability to manage and coordinate these two aspects has further improved, which, in turn, is more conducive to expanding high-level opening-up and creating a virtuous cycle of “opening-up promoting further opening-up.” Currently, foreign investment in China encompasses 20 industry categories and 115 major industry sectors. From 2017 to 2023, China’s actual utilization of foreign capital grew by 25 percent, with the proportion of foreign investment in high-tech manufacturing rising to 37.4 percent. This growth is not only rapid in quantity but also effective in quality.
Currently, there is significant attention, both domestically and internationally, regarding the new regulations on the establishment of wholly foreign-owned hospitals and the entry of foreign investment in the manufacturing sector. China has reached, or is close to reaching, an internationally advanced level of opening-up in these two areas, gaining the initiative. This not only marks a step forward in China’s commitment to a higher level of opening-up but also conveys China’s determination to participate deeply in the global division of labor in manufacturing and services. In today’s era of economic globalization, the development of others does not equate to a loss for you; the fundamental truth is that we must work together to expand the pie. The distorted logic that being open is unpromising while being closed has an optimistic outlook exists only in the fantasies of certain Western opinions; it does not exist in reality.
