CAITEC report - Multinationals in China: New Possibilities in Reshaping of Global Supply Chains

QINGDAO,China,June 22,2022 --The 3rd Qingdao Multinationals Summit,co-organized by China's Ministry of Commerce and the Shandong provincial government,was held in Qingdao,East China's Shandong province,on June 19. The report,Multinationals in China: New possibilities in Reshaping of Global Supply Chains,compiled by the Chinese Academy of International Trade and Economic Cooperation (CAITEC),a consultative body directly under the aegis of the Ministry of Commerce,was published during the summit to elaborate on the opportunities afforded by changes to global supply chains amid a new situation,with topics on the reshaping of global supply chains,the investment confidence of multinational companies in China,the role of China in global supply chains,and how China would fit in to the evolving global supply chain structure in the future.

According to the report,despite the accelerated restructuring of global supply chains,multinationals still see China as an important destination for global investment due to its strong core competitive strengths with a mature industry supporting environment,huge headroom for market growth and high labor productivity.

In 2020,FDI inflows into China's manufacturing sector declined to US$31 billion due to the pandemic. However,the amount increased 8.8% year-on-year to US$33.73 billion in 2021 following the government's success in COVID-19 prevention and control. The increase is 1.1 percentage points higher than the growth rate of global manufacturing FDI.

Large foreign investment projects maintained rapid growth in China. Of the newly approved foreign investment or capital increase contracts,the number of large projects valued at more than US$100 million surged from 834 in 2019 to 1,177 in 2021,continuing double-digit growth for three consecutive years.

Thanks to the improving investment structure,China's high-tech manufacturing sector sustained high growth with the support of foreign investment,accounting for over one-third of the total FDI,while the number of major foreign investment projects maintained double-digit growth for three years in a row. With rapid economic development,some central and western provinces and cities are emerging as new contributors to the manufacturing sector by attracting additional foreign investment. Multinationals witnessed an increase both in revenue and profits.

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