In 2021, China’s cross-border two-way investment and financing continued to be active and foreign direct investment in China reached a new high
Epicenter wide net Beijing on March 26, the news (reporter Tang Jing) according to the voice of the central radio and television reception desk economy “the world of finance and economics” report, the State Administration of Foreign Exchange 25 released the “2021 China international balance report, the report showed that in 2021 China’s cross-border two-way investment and financing for active, direct investment in China is rising to 32% in 2020, a record high.Although lower than 2020, China’s securities investment is still significantly higher than the pre-epidemic level of 2019.According to the Report on China’s Balance of Payments 2021, cross-border two-way investment and financing continued to flourish, with a net increase of 661.6 billion US dollars in all types of investment in China in 2021. Among them, direct investment in China reached 334 billion US dollars, up 32% from 2020 and a record high.Why is China so attractive against the backdrop of the global spread of COVID-19 and the complex international situation?Wei Liang, an expert on the world economy, said, “One is that the economy is relatively stable, which leads to relatively stable expectations in terms of direct investment.At the same time, the world is still facing the pressure of the COVID-19 pandemic in the past two years. It should be said that China is still one of the countries that have done the best in epidemic prevention.Second, I think mainly comes from the trust in China’s future economic development policy transparency and policy stability of the trust, because our country reform and open policy in 40 years has formed a whole set of system of economic development, including the system of economic governance, these things are predictable, actually this is also our country to attract foreign investment over the years a root cause of rising year by year.The third one is the improvement of the business environment. The improvement of the business environment in recent years, especially in the past two years, is obvious to all.The fourth is long-term growth potential. China’s economic growth potential is one of the most promising in the world.”In terms of securities investment, the net inflow of foreign securities investment to China in 2021 was us $176.9 billion, down 28% from 2020.Among them, the net inflow of overseas bond investment in China was 93.8 billion US dollars, and the net inflow of equity investment was 83.1 billion US dollars.It can be seen that although China’s securities investment is lower than that of 2020, it is still significantly higher than that of 2019 before the epidemic.Wei Liang analyzed that from the changes in the amount of securities investment in the past two years, the short-term fluctuations were mainly caused by changes in external liquidity.”Starting from 2021, there has been a wide discussion and widespread speculation in the financial market about when and how the US monetary policy will need to be tightened,” Wei said.This will change the liquidity of all countries except the United States. It actually forms a ‘siphon’ effect, and this’ siphon ‘effect also has an impact on foreign investment in China’s securities.Generally speaking, if we look at the historical timeline, the inflow is relatively large, and we are still optimistic about the potential of China’s economic development and the current dividend. External liquidity has played a supporting role.”On the other hand, China’s outbound investment of all types increased by a net $623.4 billion in 2021.The report explains that this is mainly because domestic entities have increased their overseas investment, deposit and loan activities in the context of abundant domestic foreign exchange liquidity.Liu Yingkui, vice president of the China Council for the Promotion of International Trade (CCPIT), said one of the main reasons for the rapid growth of China’s outbound investment is that China has a very unique capability advantage in infrastructure.”Some underdeveloped and developing countries have very poor infrastructure. If they want to develop their economy, they have to develop some infrastructure first,” He said.The infrastructure construction in developed countries is decades and hundreds of years old and relatively outdated. In fact, there is a huge demand for it.And China is ahead in some areas, such as new energy, including nuclear power and high-speed rail.”It is worth noting that in terms of growth rate, ofDI of financial sector increased by 56% compared to 2020, far higher than the 30% year-on-year decline of non-financial sector.The growth rate of ofDI in the financial sector is much higher than that in the non-financial sector, which shows a positive signal of structural adjustment and that cooperation between China and other countries is expanding from non-financial to financial sectors, Wei said.