Yet, foreign companies’ investment priorities and concerns have shifted in the past few years, as China closed off its borders during the pandemic.

“When you’re trying to attract FDI, it is a multiple-year process … You need a signal from [company’s] leadership that ‘we need to invest more’. You can only get that through visits,” said Michael Hart, president of the American Chamber of Commerce in China (AmCham).

Hart said the process of executives visiting China after three years of absence “is still at the beginning”.

Chinese officials – from the top to bottom of the apparatus responsible for driving foreign investments – have been attempting to engage their counterparts on a charm offensive.

FDI inflows into China (1984-2021)

In the past week, China’s embassies around the world – from Cairo to Washington – have organised “roadshows” for local business leaders to brief them on a new event – the China International Supply Chain Expo that will take place in Beijing on November 28.

The exhibition promises opportunities for foreign investors in smart cars, green agriculture, clean energy, digital technology and healthy living, according to official statements.

These moves come with Washington and its Group of Seven (G7) allies having said they do not want “decoupling” but “de-risking” in their supply chains that they see as being overreliant on China.

The commerce ministry has been reaching out to foreign investors in recent months. Its chief, Wang Wentao, has met high-level foreign executives from multinational companies more than 20 times, and officials have held exchanges or “roundtables” with foreign business chambers.

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During the latest roundtable discussion on Friday, Beijing tried to ease concerns of foreign investors on cross-border data flow, export controls and implementation of an anti-espionage law.

Jens Eskelund, president of the EU Chamber of Commerce in China, said after the second-quarter economic data was released that he was “almost certain” that the confidence levels among European companies operating in China had dropped further.

The European Commission’s economic-security strategy and Germany’s long-awaited China strategy – both released in the past month – also emphasised “diversifying” supply chains.

Eskelund also noted that Beijing’s broadening of the counter-espionage law, and the introduction of the law on foreign relations, both of which took effect from July 1, have further clouded investment prospects.

Chambers have been calling for clarity on these laws, and he said their members would need to do further dual diligence regarding these changes, as they are unclear on how to comply with the broad spectrum of law.

“There has been a lot of ambiguity in regulations … And I think, in many ways, security seems to be more important than growing the economy,” Eskelund said.

Eskelund added that these changes will require that more dual diligence be done, and therefore the costs and risks will have a bigger impact on small and medium-sized investors than on multinational corporations.

China vows private firms, like state firms, will be ‘bigger, better, stronger’

An AmCham survey published in March has also expressed similar sentiments. A majority of 55 per cent of surveyed members no longer regarded China as a top-three investment priority amid growing concerns about the country’s policy uncertainties and bleak bilateral ties.

Chinese economists admit that it will continue to be a top challenge for China to boost that number under the current conditions.

Looking at the economic numbers released from the first half of the year, Guan Tao, global chief economist at Bank of China International, said China would continue to face the challenge of “reshaping” the global supply chain.

“Geopolitical factors have had big impacts on China, as they have brought along many uncertainties,” said Guan, a former director at the State Administration of Foreign Exchange. “We will be seeing more impacts on [our economy] from the changes in the global supply chain.”

Wang Wen, a researcher at the Academy of Macroeconomic Research, said: “Attracting foreign investment is, of course, very important to the Chinese economy, especially in terms of job creation and technology advancement.”

Wang, who works at the research centre under the National Development and Reform Commission, said that instead of sweeping policy changes, it is likely that the government will make “amendments on smaller aspects to improve the practical implementation of policies”.