As a public health emergency, the COVID-19 epidemic will have a certain impact on foreign investment in the short term.
The extent to which the absorption of foreign investment is affected depends on the duration and scope of the epidemic, and it also makes investors more wait-and-see. Although there are many difficulties in stabilizing foreign investment, as long as all parts of the country do everything possible to provide services for foreign-funded enterprises and attract investment under the premise of preventing and controlling the epidemic, the negative impact of the epidemic can be overcome.
Judging from the latest data, during the epidemic prevention and control period, Zhejiang Hangzhou has made good progress in attracting foreign investment. Not only did the major projects such as Hang Lung, Kerry, and Sun Hung Kai introduced in 2019 progress smoothly, but also in early 2020, it was reported that PepsiCo will spend 705 million US dollars to acquire Hangzhou Holmes Food Co., Ltd.
Regarding the impact of the COVID-19 on foreign investment, Sang Baichuan, Dean of the Institute of International Economy, University of International Business and Economics, expressed his views in an interview with a reporter from the Economic Daily.
Limited impact on the absorption of foreign capital
The COVID-19 epidemic, as a public health emergency, will have a certain impact on foreign-invested enterprises in the short term. "For safety reasons, some foreign-owned companies may choose to suspend investment. In addition, the movement of personnel is strictly restricted, which will also bring some inconvenience to investment activities, which will definitely affect the expansion of foreign investment." Sang Baichuan, Dean of Institute of International Economy , University of International Business and Economics, said in an interview with a reporter from the Economic Daily. However, in the long run, the epidemic will have little impact on foreign investment. Sang Baichuan said, "From the perspective of epidemic prevention and control, China has adopted strong management measures in response to emergencies, and the effect is very obvious."
Controllable impact on the global value chain
In the short term, some companies have suspended work, restricted labor mobility, blocked logistics, and sluggish investment activities. Many supply chains will be impacted and the value chain system will also be affected. "As the epidemic is under control, the rate of business resumption of work has increased, and the economy has recovered rapidly, China, as an important part of the global value chain system, still has an irreplaceable function." Sang Baichuan said that China is the world's largest manufacturing country and the world The largest country in trade in goods and the second largest economy in the world. The size of this economy and the close value chain, supply chain and production network system formed in the global economy determine that the epidemic cannot block China’s division of labor in the global value chain and the role of the system.
There are many investment opportunities after the epidemic.
At present, our country has made positive progress in fighting the epidemic, and the resumption of work and production is proceeding in an orderly manner across the country. At the same time, our country has successively introduced a series of policies and measures in finance, taxation, insurance, and social security, which have played an important role in stabilizing the economy and stabilizing foreign investment. In the long run, to achieve economic recovery in the fight against the "epidemic" and stabilize foreign investment, more supportive measures can be introduced.
Sang Baichuan believes that, on the one hand, whether it is possible to consider establishing a corporate support fund to respond to public safety emergencies to accurately help companies that have been severely affected by the epidemic, including foreign-funded companies; on the other hand, China is undergoing economic structural transformation and upgrading , promote the upgrading of the manufacturing industry and comprehensively improve the critical period of the quality of economic development. During this period, China needs to deepen its opening up and actively utilize foreign capital. We should actively promote the full implementation of the "Foreign Investment Law" and improve the business environment for foreign investment.
In addition, in the process of China’s economic transformation and upgrading, the service industry is facing great opportunities for development. In order to enhance the competitiveness of the service industry and promote rapid development, China should also invest in infrastructure such as electricity, civil aviation, railways, postal services, and municipal public industries. Expand market access for foreign investment in the field, and further expand the intensity of opening up. Financial, medical, education, pension and other service industries should further relax restrictions on foreign investment. Sang Baichuan said: "Through efforts to create an excellent environment for foreign investment and promote institutional opening, we will stabilize foreign investment expectations."
