A new year has arrived as scheduled, and a new future is approaching us. Looking back at 2023, facing a complex international and domestic environment, China has steadily expanded its high-level opening-up to the outside world, laying a solid foundation for the sustained recovery and improvement of the macroeconomy. Although there have been fluctuations in the indicators of attracting foreign investment, the overall situation of attracting foreign investment in China has remained stable, and the level of attracting foreign investment still ranks among the top in the world, demonstrating strong resilience.

Foreign funded enterprises play an important role in China's economic development, and China always pays attention to the progress of their development in China. From 2012 to 2022 alone, foreign-funded enterprises contributed 22.5% of industrial added value, 16% of taxes, 38.7% of imports and exports, 20.7% of research and development investment, and nearly 10% of urban employment opportunities to China. In 2024, "high-level opening up to the outside world" remains the key word for China's economic development. Institutional opening up will introduce new measures and make new progress, and foreign enterprises in China will also face new opportunities for development.

Enhanced consistency of macroeconomic policies

The macroeconomic situation is the most obvious indicator for enterprises to observe market conditions and make decisions, which means that the introduction of macroeconomic policies not only has a guiding role in market development, but also plays an important role in the decision-making of market entities, including foreign enterprises. Due to the complex and ever-changing economic situation both domestically and internationally, various government departments need to adjust their decisions based on the situation at any time. In the process of policy-making, each department not only needs to consider timing, degree, and effectiveness, but also has its own goals and priorities. Without systematic planning and communication coordination, it will form the so-called "synthesis fallacy", which has the opposite effect on promoting economic development. The Central Economic Work Conference held in December 2023 pointed out the need to strengthen the coordination and coordination of policies related to finance, currency, employment, industry, region, science and technology, and environmental protection. Non economic policies should be included in the consistency assessment of macroeconomic policy orientation, and policy coordination should be strengthened to ensure joint efforts and formation. 2024 is known as the "Global Super Election Year", and the risks brought about by political changes in multiple countries have sharply increased. In this context, while maintaining policy coherence, China emphasizes the consistency of macro policy orientation, which will promote the shaping of a good economic development environment and be more conducive to foreign-funded enterprises formulating their own development plans.

Regional transfer opens new space

The accelerated restructuring of the global supply chain industry chain has put certain pressure on China to attract foreign investment. However, with the advantages of a large market size, a complete industrial system, and complete infrastructure, China still has attractiveness to foreign-funded enterprises. In recent years, China has utilized regional coordinated development strategies to promote the transfer of industries from the eastern coastal areas to the central, western, and northeastern regions, providing new development space for foreign-funded enterprises. Compared with Southeast Asian countries such as Vietnam, the central and western regions, as well as the northeast region, still have advantages in terms of human resources, land resources, mineral resources, and industrial foundation. These regions have made efforts to continuously improve infrastructure and optimize the business environment, and have established platforms for opening up to the outside world such as free trade zones, as well as channels for opening up to the outside world such as China Europe freight trains. A number of demonstration projects have been implemented. At present, reward policies have been introduced in the central and western regions, as well as the northeast region, to encourage foreign enterprises to go and land. It is worth mentioning that not only traditional industries have started the process of transfer, but also related digital economy enterprises have begun to layout in the central and western regions under the drive of the "East Calculation and West Calculation" project.

Spillover effects of free trade zones

At present, China has established a high-level gradient path of opening-up from pilot free trade zones to provinces, cities, and the whole country, and foreign enterprises will also invest along this path. 2023 marks the 10th anniversary of China's construction of pilot free trade zones. Data shows that in 2022, 21 pilot free trade zones contributed 18.1% of foreign investment to the country with a land area of less than 4 ‰. In 2023, the Xinjiang Pilot Free Trade Zone was established, and the pilot free trade zones were further expanded to 22, covering the eastern, central, and western regions. These pilot free trade zones are accelerating the replication and promotion of institutional innovation achievements formed by existing pilot free trade zones, while exploring and achieving a number of distinctive institutional innovation achievements based on their characteristics and positioning. With the deepening implementation of the strategy to enhance the pilot free trade zones, the 22 pilot free trade zones will strengthen linkage, transform fragmented and micro institutional innovation into systematic and integrated institutional innovation, especially in achieving new results in international economic and trade rules based on elevation standards, and lead high-level opening up to the outside world with institutional openness. This will be beneficial for more foreign-funded enterprises to expand their presence in the Chinese market along the path of "pilot free trade zones - provincial and municipal areas - national", continuously forming spillover effects and enhancing China's attractiveness to foreign investment.

Full competition in the manufacturing market

The manufacturing industry plays a crucial role in economic development and is the main force for technological innovation and employment absorption. The openness of the manufacturing industry means that the gathering of technological innovation factors and employment will be better solved. China announced the complete lifting of restrictions on foreign investment access in the manufacturing sector in 2023, and its positive impact will be further reflected in 2024. In the short term, this is a key move to actively respond to the accelerated restructuring of global industrial and supply chains, which will further stabilize the proportion of China's manufacturing industry; In the long run, this is a choice based on market competition mechanisms, which will help China's manufacturing industry transform and develop, and also help attract foreign enterprises in the productive service industry to develop in China. In the fully competitive Chinese market, only by having more advantages in technology, management, data, business models, and other aspects can we better establish ourselves. The Chinese market has become a high-level arena for global manufacturing enterprises, including Chinese enterprises. This means that the time when foreign-funded enterprises produced products that were slightly behind one or even several generations in China is not only gone forever, but also foreign enterprises have to showcase their better selves in the Chinese market. Whether it is relative strength or misplaced competition, the story of foreign-funded manufacturing enterprises in 2024 will be even more exciting.

Continuous transformation from exhibitors to investors

Creating internationally renowned exhibitions is an important platform and lever for a country or region to showcase its own strength and attract foreign investment. In recent years, China has held consecutive Canton Fair, Import Expo, Service Trade Fair, and Data Trade Fair. Last year, China also established the world's first national level supply chain themed chain expo. These exhibitions have high visibility, strong attraction, prominent influence, and obvious long tail effects, quickly forming positive feedback. A group of foreign exhibitors signed contracts during these exhibitions, becoming repeat customers and investors, demonstrating their determination and confidence to deeply cultivate the Chinese market. Without a doubt, these exhibitions have become windows for China to build a new development pattern, platforms to promote high-level openness, and international public goods shared globally. In 2024, these internationally renowned exhibitions will continue to be held. For example, the second Chain Expo will be held from November 26th to 30th, 2024, and preparations have been fully launched. Through well-known exhibitions, foreign-funded enterprises showcase their product and service advantages to target groups in the Chinese market, further expanding their brand influence and continuing to deeply cultivate the Chinese market.

Invisible champions shape a new landscape

China has expertise, uniqueness, and innovation, while developed countries have hidden champions. Unlike most specialized, refined, and innovative enterprises in China, hidden champion enterprises in developed countries have a higher level of internationalization, and even were born as global oriented enterprises. Since we are facing the world, we cannot ignore the huge Chinese market. The comprehensive lifting of restrictions on foreign investment access in the manufacturing industry, expanding the opening up of the service industry, using technological innovation as the driving force, increasing intellectual property protection, developing green and digital economies, and optimizing the business environment have all created a favorable environment for the development of hidden champion enterprises. Invisible champions will increase their layout in the Chinese market, not only bringing new technologies and promoting technological innovation in China, competing with local specialized, refined, and innovative enterprises, but also forming better industrial support with large domestic and foreign enterprises, further enhancing the presence of foreign-funded enterprises in China

Serving Chinese enterprises to showcase their skills overseas

The continuous surge of Chinese enterprises going global has not only allowed companies from all over the world to see the charm of Chinese enterprises, but also further recognized that China has become a fertile ground for investment and development. A group of "going out", "going in", and "going up" Chinese enterprises have become the "business cards" for investment promotion, attracting many foreign-funded enterprises to develop in China. Among them, with the continuous expansion of China's service industry opening up, a large number of foreign-funded service enterprises have come to China for development. In addition to serving foreign-funded enterprises, they have also begun to use their high level of internationalization advantages to help more Chinese enterprises "go out", "enter", "go up", including but not limited to financial payments, artificial intelligence, accounting consulting, inspection and testing, public relations lobbying, advertising and marketing, insurance and security industries. The year 2024 is the starting year of the new decade of jointly building the "the Belt and Road". Supporting the eight high-quality actions of jointly building the "the Belt and Road" provides a roadmap for Chinese enterprises to better "go global" and participate in the joint construction of the "the Belt and Road", and also provides new opportunities for foreign enterprises in the service industry to develop in China. Many well-known foreign-funded enterprises in the service industry have deep business foundation and contacts in many countries that jointly build the "the Belt and Road", and can show their talents in serving Chinese enterprises to go abroad, creating a number of typical cases of joint development of third-party markets.

Digital empowerment needs to be further explored

When discussing the current Chinese economy, there is no other keyword that can be avoided - the digital economy. Foreign enterprises with digital technology are expanding into the Chinese market, including manufacturing, agriculture, and trade. Their goal is to grow together with ecological partners in China. The rich application scenarios provide new opportunities for foreign enterprises to develop their business. For example, in the manufacturing industry, the scenarios of Industry 1.0 to Industry 4.0 coexist in the Chinese market, and large, medium, and small enterprises each have their own digital needs. In addition, China has completely lifted restrictions on foreign investment in the manufacturing industry, which has led to an increasing demand for digitalization in the manufacturing industry. Similarly, the diverse business forms of domestic and foreign service industry enterprises in the Chinese market have further expanded the development space of foreign-funded enterprises in the digital field. Especially when the Central Economic Work Conference assigned key tasks for 2024, it emphasized the need to "seriously solve issues such as cross-border data flow and equal participation in government procurement". This means that the cross-border data flow problem that troubles foreign-funded enterprises in the digital economy will be resolved, injecting development confidence into foreign-funded enterprises in related industries.

Chinese experience is moving towards the world

The term "Chinese experience" here does not refer to the "Chinese experience" that Chinese enterprises bring to the international market through "going global", but rather the "Chinese experience" that foreign-funded enterprises that deeply cultivate the Chinese market summarize and export to the global market. In 2024, China will continue to expand its high-level opening-up to the outside world, which is a broader, broader, and deeper level of openness. Global factor resources will further concentrate in China, and both Chinese and foreign-funded enterprises can fully feel the increasingly fierce international competitive atmosphere in the Chinese market. In fierce competition, foreign-funded enterprises need to improve their levels in research and development, manufacturing, marketing, service, management, and other aspects to cope with personalized and customized customer needs and rapidly changing market conditions. It is in the continuous competition that foreign-funded enterprises gradually form rich experience in research and development, manufacturing, marketing, service, management, and other aspects, and constantly update, supplement, and revise them, continuously delivering them to the headquarters, forming a huge experience base for timely promotion in other markets. In this sense, enterprises that can stand undefeated in the fully competitive Chinese market will also be invincible in other markets.

Opportunities are nurtured in openness, cooperation is facilitated in openness, friendship deepens in openness, and achievements are forged in openness. We often say that the development of enterprises from various countries in the Chinese market is a two-way journey, and investing in China means win-win cooperation. For China, openness contains vibrant vitality and will continue to inject strong impetus into high-quality development; For foreign enterprises in or about to come to China, openness contains enormous opportunities and potential, and will continuously contribute to the growth of their own businesses. Here, we wish foreign-funded enterprises to fully enjoy the opportunities brought by the opening up of China in 2024 and achieve a win-win situation with China.