Opening up China's manufacturing sector

Beijing draws investors by removing all market access restrictions

KARACHI:

China has unlocked another astonishing revolution as it is presenting itself as a land of opportunities to invite and incentivise foreign investors while getting rid of all market access restrictions in the manufacturing sector. This landmark initiative by the world's second-largest economy has opened up new vistas.

China's government has sagaciously adopted this strategy to kill two birds with one stone and it is gaining more political and economic prominence.

Firstly, the investors of hostile countries like the US, EU and India will prevent their respective governments from taking any strict action against China and secondly Beijing will attract more investment and latest technologies once new industries are set up there.

Private enterprises are entering the mainstream in China. The most prolific novice or experienced investors can go on to do great things. China will be in a win-win situation in both conditions, if foreigners win laurels there or even if they lose the invested capital.

According to the official website gov.cn, the new national negative list signifies that China's manufacturing industry has reached a world-leading level of openness, while almost all developing countries impose restrictions on foreign investment in the manufacturing sector, and even some developed economies still maintain certain foreign investment limits in the field, according to a research institute working under the National Development and Reform Commission (NDRC).

For China, the manufacturing industry is the earliest sector to open up to foreign investors, and it is also the most competitive and most closely coordinated sector in terms of global industrial division of labour.

China's manufacturing of value-added goods surpassed that of the United States for the first time in 2010 and accounted for approximately 30% of the global total in 2023, making the country the world's largest manufacturer for 14 consecutive years.

The country has seen steady foreign investment growth in hi-tech manufacturing in recent years. In the first nine months of this year, the medical equipment and instrument manufacturing industry as well as the computer and office equipment manufacturing sector saw actual foreign investment utilisation rise 57.3% and 29.2% year-on-year, respectively.

China will leverage its vast market advantages to support exchanges and cooperation with foreign enterprises and make its manufacturing sector high-end, smarter and more eco-friendly, according to the NDRC.

Leading sinologist, analyst and researcher Professor Engineer Zamir Ahmed Awan said no doubt China is one of the largest investors in the world as it possesses immense wealth. It has invested more than $30 billion in Pakistan, $400 billion in Iran and hundreds of billions of dollars in the African states and other countries.

It does not mean that it does not long to attract foreign investors. It intends to bring foreign investors because of two main reasons – political and economic engagements. If US investors come to China and Washington imposes sanctions, these investors will urge the US government to abandon this policy because they are making money in China.

Similarly, skirmishes often break out between Chinese and Indian armies in the disputed area on international borders; still China has invested over $130 billion in India. This may influence Indian companies, which will press their government not to sever relations or allow the worsening of ties because of their high economic interests.

China has adopted a fully-fledged strategy to bring investors from Germany, France, Italy, the US, India and other countries to cherish economic and political benefits.

Big businessmen take ample loans from banks to set up businesses aimed at ensuring the protection of investment. It does not mean that they are unable to make 100% investment from their own pockets.

Saving money is a rule of thumb in the world. For example, if they suffer losses, banks will also incur some losses and if they earn profit, banks will be returned loans.

When it comes to economic benefits, China opens doors for foreign investors for setting up more and more industries.

First, foreigners will establish their businesses to bolster the national economy. Secondly, once overseas investors nip down to a foreign country, they will build state-of-the-art industries and bring hi-tech machinery to earn far better and speedy returns as they are already experienced industrialists running industries in their own countries.

Consequently, China will get more investment with modern machinery and well-experienced professionals and achieve indirect political gains as well.

Eminent senior economic analyst Dr Sabur Ghayur said, "I visited Tianjin in the mid-2000s as a participant of an international conference. This port city was then in the midst of industrialisation. We were invited to visit and see different enabling measures taken by the city government to attract investors, particularly foreigners. I was amazed to see the nature and extent of infrastructural support such as the technical and vocational education and training exclusively catering to the skill needs, as indicated by the employers and industry."

"Since my visit and as a keen observer, I have been taking note of massive transformation in this port city over the years and in attracting foreign investors as well."

He said that the removal of all restrictions for foreign investors would attract significant investment owing to a solid infrastructural base, the possibility of greater access to the growing purchasing power of a billion-plus Chinese population and greater integration into the value chain globally.

It is "outmanoeuvring the hegemony of the US and UK, and most importantly countering India's feared growing influence in getting a larger cake of foreign investment inflows and larger trade volumes in the global market."

The proximity to Pakistan, the road access between the border cities of China and Pakistan, leading up to Gwadar, and the recently inaugurated international airport in the port city are natural attractions. However, it is contingent upon addressing Chinese concerns and building yet-to-be-created socio-physical infrastructure as well as ease of doing business.

It is high time for Pakistani employers, traders, transporters and other service providers, who should do well to strike a joint strategy together with the key federal and provincial ministries and departments. The time is running out fast.

The writer is a staff correspondent