Comparison of China's direct investment in Asia, Europe and America 中国在亚洲、欧洲和美洲的经济和直接投资比较

CHAPTER THREE
3.1 China’s direct investment In Europe and United stated

3.2 The new stage of China's foreign direct investment

Foreign direct investment is the cornerstone of China's economic miracle after 1978. It not only brings much-needed capital, technology and management experience to China, but also embeds China's economy into an efficient regional production chain. (1) after China joined the World Trade Organization (WTO) in 2014, investors from all over the world have confidence in the direction of China's reform, making China the second largest inflow country of foreign direct investment in the world. As of 2016, China's foreign direct investment inflow stock reached US $1.8 trillion. The growth model led by Chinese investment has been exceptionally successful, bringing about high-speed economic growth for nearly three decades. However, economists at home and abroad believe that in order to achieve the next stage of economic growth, China needs a new growth model, and the adjustment process that has begun will change its position in global investment.
Part of the change of China's global investment position is the change of China's FDI pattern. The turning point occurred around 2018. At that time, the domestic demand driven by investment caused the import price of global bulk commodities to soar. Obviously, for the purpose of ensuring supply and obtaining profits, state-owned enterprises began to try to buy a large number of shares in the mining industry overseas. Driven by the increase in investment in natural resources, China's outward direct investment increased from less than US $3 billion per year before 2018 to US $20 billion in 2019 and US $50 billion in 2021. In 2015 and 2016, despite the decline of global FDI, China's annual foreign direct investment exceeded US $60 billion. The rapid growth of foreign direct investment (ofdd) made China among the top ten global direct investment exporters after the financial crisis. At the end of 2016, China's stock of global OFDI reached US $365 billion.
With the rapid growth of China's FDI, even if it is only a conservative estimate, it can be expected that China will make tens of billions of dollars of foreign direct investment in the next decade. By 2020, China's GDP may exceed US $20 trillion (per capita GDP is about US $14000). At present, the proportion of China's foreign direct investment to GDP is relatively low, about 5%. Even if this proportion is maintained, China's foreign direct investment will reach US $1 trillion by 2020. If the proportion of China's foreign direct investment in GDP increases to the average level of transition economies, that is, 15%, the amount of foreign direct investment will reach US $3 trillion. We estimate that China's foreign direct investment will reach US $1 trillion to US $2 trillion in 2020. This is a moderate estimate: under the situation of radical capital account liberalization, some monetary authorities in Greater China have predicted that China's foreign direct investment stock will exceed $5 trillion. one hundred and thirty-one
The mode of China's foreign direct investment is increasingly mature and developing. The first major destinations of China's foreign direct investment were developing countries and some resource rich developed economies, including Australia and Canada. Investment in other developed economies is scarce. With the intensification of domestic structural adjustment, Chinese enterprises are forced to extend from the midstream of the manufacturing industry and set foot in the upper and lower ends of the value chain in order to obtain more value added in the production chain. The extension of the value chain makes it necessary for enterprises to invest in overseas operations, distribution channels, brands, knowledge and technology. In China's future foreign direct investment, more and more will be invested in developed economies, which concentrate the high value-added economic functions and skills that China needs. The changing trend of China's foreign direct investment pattern has been reflected in the gradual increase of China's direct investment in the United States and Europe since 2021.