In 2020, China has become one of the primary destinations for foreign direct investment (FDI) globally. Despite the challenges brought on by the COVID-19 pandemic and the global economic recession, China was the world's first destination for new foreign direct investment in 2020. Furthermore, the country introduced a number of policies to further improve its business environment and assist businesses with economic recovery.

In fact, according to the United Nations Conference on Trade and Development, China recorded growth of 4 percent in FDI inflows, becoming the largest recipient of FDI and in the process overtaking the United States. The Ministry of Commerce also reported that the FDI into China in 2020, in actual use, increased by 6.2 percent compared with 2019 and reaching almost RMB 1 trillion.

China has set forward a number of preferential policies in order to transition its economy to engage in deeper global integration and allow more foreign investors to enter into the domestic market. Since the passing of the Foreign Investment Law, the country has reduced barriers to FDI and in addition established more free trade zones. Noticeably, 17 new pilot free trade zones were opened for foreign investment from 2016 to 2020. Pilot free trade zones have a higher degree of autonomy to execute their own decisions in policy-setting areas. Moreover, in recent years, China has been active to further promote international trade and openness by organizing three China International Import Expo fairs (CIII), as well as the China International Fair for Trade and Services in 2020.

Strict epidemic prevention measures, emergency relief packages for businesses, and supporting fiscal policies were among the factors that have contributed to the economic recovery in China and as a result, continued to attract investment from abroad despite the global economic slowdown.

China has become the only major economy in the world to show growth in 2020. The numbers indicate that the GDP growth was 2.3% last year, the slowest in the past four decades due to the rapid contraction at the start of the year. Nevertheless, the most recent GDP data confirms that the economy has normalized and the positive momentum of Q4 economic growth is set to continue in the future months of 2021.

If you would like to know more regarding how China facilitates foreign direct investment and how it can benefit your business feel free to reach us at info@phcadvisory.com.