new economy

　　

Greenfield investment in China by EU companies surged to €3.6bn in the second quarter, the highest level on record, according to Rhodium Group. At present, on the one hand, the EU has imposed tariffs on China's electric vehicles, and on the other hand, EU enterprises represented by German automakers continue to deeply cultivate China. Rhodium said the rise in European investment in China was "surprising" at a time when the EU was pursuing economic "de-risk" policies.

Photo taken on Oct. 4, 2019 shows the European Commission building in Brussels, Belgium. In fact, most of the recent investment by EU companies in China is aimed at promoting local production, and one of the important reasons is to avoid the impact of geopolitical situations and trade barriers in China. This shows that although external shocks such as the politicization of economic and trade issues have accelerated the restructuring of global value chains, the core factors affecting the restructuring are still technological development and the optimization behavior of market players, the importance of China as an investment destination has not changed, and the attraction of the Chinese market is impossible to give up.

Over the years, China has become a hot land for international capital to compete for investment with its super-large-scale market, independent and complete modern industrial system, sufficient reserves of industrial workers and favorable policy dividends. Despite the slowdown in world economic growth and the overall downturn in global outbound investment, resource factors continue to pour into China. Rhodium points out that many companies have looked closely at other markets over the past few years and found it difficult to match China in terms of cost, supply chain or logistics. Apple CEO Tim Cook said there is "no place more important" to the company's supply chain than China. Huang Jinbang, General Manager of Qatar Airways Greater China, believes that the diversity and continued growth potential of the Chinese market is a strong driving force for Qatar Airways to stay here for a long time.

At present, "in China, for China" has become the core strategy of many foreign enterprises in China, and "investing in China is investing in the future" is the general consensus of global enterprises. Eight well-known foreign pharmaceutical companies, including Eli Lilly, Pfizer, Bayer and Medtronic, have announced that they will set up new R&D and innovation institutions in Beijing. The 7th China International Import Expo is being held in Shanghai, a total of 3,496 exhibitors from 129 countries and regions participated in the enterprise exhibition, the number of countries (regions) and the number of enterprises are more than the last. Zhong Zhonglin, CEO of Nippon China, said that at the first CIIE, Nippon "not only wants to showcase our innovative products and technologies, but more importantly, to show our long-term commitment and confidence in the Chinese market." According to him, at present, Nippon has established 74 factories and 10 research and development centers in China. In August this year, Nippon launched the construction of the Nippon Asia-Pacific R&D Innovation Center in Pudong, Shanghai.

Photo taken on Nov. 4, 2019 shows the exterior of the National Convention and Exhibition Center (Shanghai), the venue of the 7th China International Import Expo. Behind "In China, for China", foreign investment continues to be optimistic about the development prospects of the Chinese market. China is building a market-oriented, law-based and internationalized business environment. The large size of the Chinese market and its huge consumption potential continue to drive the development of foreign companies. China is constantly improving the resilience and safety of its industrial chain and supply chain, giving full play to the advantages of a sound industrial supporting system, and supporting foreign-funded enterprises to deeply participate in the international cycle. Statistics show that the return rate of foreign direct investment in China in the past five years is about 9%, ranking among the highest in the world.

Rhodium noted that the strong growth in European direct investment in China compared with previous years was concentrated in the automotive sector, with German carmakers accounting for the vast majority of EU auto-related foreign direct investment in China. Since Volkswagen first entered China more than 40 years ago, German auto companies have witnessed and participated in the continuous development of China's auto industry. According to the report of Pricewaterhousecoopers, in 2023, the sales of pure electric vehicles produced by German automakers in the Chinese market increased by nearly 50% year-on-year, and the sales growth in China is very impressive. At the same time, German automakers are upgrading existing production facilities and promoting supply chain localization. Ferdinand Dudenhofer, a leading German automotive economics expert and president of the Bochum Automotive Research Institute, said that German and Chinese automotive companies are very much looking forward to strengthening cooperation, "if we can move forward hand in hand, the future of the automotive industry will be very good."

The so-called "de-risk" is no different from "de-development" and "de-opportunity". Facts have proved that only by encouraging independent innovation, embracing openness and cooperation, and adhering to long-termism, can we have the opportunity to move forward in industrial innovation. As Finnish President Stubb said during his recent visit to China, protectionism and nationalism are on the rise, which cannot be ignored. "Without free trade, there can be no growth; No growth, no welfare."