Opinion | China's new measures to boost foreign investment have great strategic significance

After Chinese Premier Li Qiang on February 10 presided over a State Council executive meeting, which outlined measures to boost domestic consumption and approved an action plan to stabilize foreign investment in 2025, Cai Tongjuan, Director of the Macro Research Department and Research Fellow of the Chongyang Institute for Financial Studies (RDCY) said in an interview with China Youth Daily that these newly released measures have great strategic significance in the context of the current slowdown in global cross-border investment growth and the complex challenges China faces in attracting foreign investment.

The meeting encouraged foreign capital to undertake equity investment in China, and urged efforts to optimize rules and procedures for foreign mergers and acquisitions. Meanwhile, it also stressed the need for domestic and foreign enterprises to be treated equally in government procurement, as well as the need to broaden financing channels for foreign enterprises.

Cai summarised the four main signals coming out of the meeting, which are:

First, the importance of stabilizing outbound foreign investment. The stabilization of foreign investment is not only a response to the current economic environment, but also reflects the importance the Chinese government attaches to foreign investment. The approval of the action plan to stabilize foreign investment in 2025 clarifies China's policy priority of stabilizing foreign investment, indicating the important position of foreign investment in China's economy, especially in maintaining foreign trade stability, promoting high-quality development, fostering innovation and improving industrial structure.

Second, responding to global economic uncertainties. The current global economy faces many uncertainties, including rising trade protectionism, increasing global inflationary pressure and geopolitical risks. The Chinese government has sent a clear signal that China will continue to enhance the attractiveness and sense of security of foreign investment in the context of increasing uncertainty in the global investment environment. By optimizing the business environment and improving the legal protection of foreign investment, the inflow of foreign investment can be stabilized, thereby maintaining the vitality and growth momentum of the domestic economy.

Third, the determination to deepen reform and opening up. By approving the action plan to stabilize foreign investment in 2025, the Chinese government can strengthen preferential policies and reform measures for foreign-invested enterprises, such as providing more support in market access, tax incentives, intellectual property protection, etc. This shows that China will continue to deepen reform and opening up, attract more high-quality foreign investment and create a fairer, more transparent and more convenient business environment for foreign investment, thereby promoting the domestic economy to develop in a more international, market-oriented and rule-of-law direction. 

Fourth, the clear political support to boost foreign investment. The launch of the action plan shows the Chinese government's firm determination at the policy level to enhance foreign investors' confidence in the Chinese market through active policy support for foreign investment. By simplifying administrative approvals and optimizing the foreign investment environment, the operating costs of foreign-invested enterprises can be effectively reduced and their return on investment improved. (By Ma Ziqian/China Youth Daily)