As China enters this historic ‘new era’ in its economic, political, cultural and social development, KPMG China is pleased to present our analysis of what this means for the business environment and the development of inward and outward foreign direct investment in 2018 and beyond.
The key messages of this report are:
- The implementation of President Xi’s ‘new vision of development’, the emergence of a ‘new economic cycle’ in China, and the implementation of a ‘new paradigm of globalization’ which is being advanced by the Chinese Government, will underwrite and determine the trajectory and characteristics of the country’s inward and outward foreign direct investment in 2018 and beyond.
- The recovery and steady growth in higher-quality investment into and out of China will support the ongoing transformation and upgrading of China’s economy, as well as the vitality and resilience of global trade and investment flows.
- Over the longer term, Chinese outbound investment and Chinese market demand will play a key role in the global economic recovery and the development of a new, more ‘inclusive’ model of globalization, and will be important forces supporting global economic prosperity.
- The reforms which the Chinese Government has announced to support foreign investment in China, enhance the supervision and regulation of market conduct, improve the management of cross-border investment flows, and deepen financial system reforms, will encourage two-way flow and connectivity of capital. However, they will necessitate certain changes in mindset and conduct by investors when thinking about how to benefit from the drivers and trends underlying the emergence of the ‘new economic cycle’ and the ‘new paradigm of globalization’.
- Partnering between Chinese and international firms – including capital providers and financiers – will become a common feature in the ‘new economic cycle’ and under the ‘new paradigm of globalization’. This will help companies localise their investments and build trust with local and international stakeholders; complement their respective comparative advantages to jointly develop third-country markets; and locate more investable opportunities along the ‘Belt and Road’.
We hope this report will help Chinese and foreign companies seize emerging opportunities and adapt to a changing business environment as China enters a ‘new economic cycle’, and a ‘new paradigm of globalization’ takes shape. By making more, high-quality investments in China and overseas markets, these companies will contribute to and shape the emergence of a new period of economic development in China and prosperity in global investment and trade.