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Letters | How China became the world’s top FDI destination in 2020
- The country’s huge population, and hence its enormous market potential, is just one of the factors that keep attracting investor dollars
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Last month, international media reports said China had overtaken the US as the world’s number one destination for new foreign investment in 2020. Why was China able to accomplish that? This can possibly be attributed to three factors: the size of China’s population, the optimal investment policies in place, and the emergence of gigantic corporations with unlimited potential.
China’s huge population offers massive opportunities in terms of potential markets for foreign investors. On May 11, the State Council Information Office announced the main statistics of the seventh national census, which put the total population at more than 1.4 billion. Moreover, China’s society is slowly ageing, with more than 264 million people or 18.7 per cent of the population aged 60 and over. They represent a hugely profitable “silver economy” for investors to tap into.
In addition, China’s opening up and aggressive investment policies also continue to spur foreign investment. However, if a large population, and by extension a large market, is an essential factor that drives the economy, some may wonder why China and not India? This is probably due to the favourable policymaking in China.
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Take the open-door policy for example. Since the late 1970s, this policy has embraced long-term opening to the outside world, introducing advanced technology and equipment from abroad and offering various incentives for foreign investment. This open-door policy has tremendously boosted the confidence and enthusiasm of foreign investors.
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China’s economy expands record 18.3 per cent in the first quarter of 2021
China’s economy expands record 18.3 per cent in the first quarter of 2021
Lastly, the emergence of mega corporations with unlimited potential plays an essential role in promoting foreign investment. Their use of advanced technology is among the factors that have helped them thrive in the country’s competitive market.
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