China economy Photo: Xinhua
Global foreign direct investment (FDI) plunged by 42 percent in 2020, while FDI to China rose by 4 percent to $163 billion, surpassing the US for the first time. The US recorded a sharp decrease of 49 percent to $134 billion, while the European Union suffered a 71 percent drop. The UK and Italy attracted no new FDIs because they have suffered high mortality rates due to the COVID-19 epidemic.
FDI refers to foreign companies’ establishment of new factories and expansion of existing businesses in a country, or the acquisition of local companies. It is an important indicator of a country’s economic vitality and openness. China’s FDI has been increasing in recent years, which is contrary to the impression that foreign companies are “fleeing” China. However, FDI in the US in 2016 was $427 billion, and China is still far from that level. China’s current No.1 position in FDI is more or less due to the ongoing COVID-19 pandemic.
But China becoming the No.1 has still caused some concern and shock. China is a peacefully developing country and all of its qualitative achievements have been accumulated from quantitative changes. In 2020, China’s greatest ability was to show amazing stability amid the crisis, which helped attract investments.
Over these years, China has faced the US-initiated trade war and the country’s strategic containment against China. But China has generally withstood the test, calmly dealt with most of the suppression and quickly formed strategic sophistication. These all add to the outside world’s confidence in China.
China’s GDP in 2020 easily reached more than 70 percent of the US figure. This is a new level in China’s GDP. The world will be more and more interested in comparing the changes of China and the US. Related analysis and hype will flood international public opinion and Chinese people will inevitably be affected and coerced by such public opinion.
The change in the balance of power between China and the US is meaningful, because it will have a profound impact on international relations and subtly transform the world power structure. Although China has never regarded surpassing the US as a strategic goal of its national development in recent years, the US is still highly vigilant and intends to put an end to China’s momentum.
But no matter what the outside world says or makes a comparison between China and the US, China must still regard meeting its domestic needs as the basis of its development, instead of competing with the US. If we indulge in such comparison and competition, we may worry too much about our gains and losses of development. Our pride and anxiety may be divorced from people’s actual interests.
China’s GDP has international political significance. But China’s population is more than four times that of the US. Chinese people do not live in the overall GDP. The growth of per capita wealth is more valuable to them, and rational distribution is particularly important. China’s national path is people-centered, which is not only to continuously improve the country’s international status, but also make people live a better life. What we want is a high degree of unity between the two.
For example, in 2020, China became the only major economy in the world with a positive growth. We have made achievements that have attracted global attention. However, it is true that China’s GDP growth rate has fallen from the previous year. The drop by 3.9 percentage points is indeed a drop and it means personal frustration for many Chinese people. The focus of China’s policy has determined that we cannot be satisfied with the positive growth which is much better than that of the US and other Western countries. Instead, we must do our best to reduce losses and do our job better.
China is still one of the fastest-growing economies, and rapid development is the fundamental source of better welfare and more opportunities for Chinese people. China has no room and no time for complacency. As long as there are problems with China’s own development, we will face challenges no matter what the external situation is.
From this point of view, it is an achievement that China has attracted $163 billion in FDI in one year. But we must be calm and clear when looking at this figure. China’s biggest advantage is that our strength allows the country not to fear external pressures and calmly handle its domestic affairs well. Let all the necessary reforms be promoted and implemented, and let various internal dissatisfaction and disputes be digested. Only then will China’s comprehensive international competitiveness moves forward.