first time and became the largest recipient of FDI (see Diagram 1-2).
Diagram 1-2 Actually utilized value of FDI, 2000–2015
Data Source: Statistical Communiqués of the People’s Republic of China on the National Economic and Social Development issued by China’s National Bureau of Statistics in 2000–2015.
Despite the generally rising trend of FDI, China’s manufacturing industry has seen major turbulence in its actually utilization of foreign capital over the 16 years between 2000 and 2015. As shown in Diagram 1-3, taking the year 2011 as the dividing line, even though occasional decline occurred, China’s manufacturing industry largely maintained an upward trajectory in attracting foreign capital before 2011. However, in the five consecutive years from 2011 to 2015, China’s manufacturing industry was hit by the slump of foreign investment, the annual amount of which dropped by 6.21%, 6.78%, 12.3% and 1.45% respectively. Likewise, after the year 2005, China’s manufacturing industry also saw a continuous decline of the proportion of its utilized foreign investments. The main reasons for the waning attractiveness of China’s manufacturing industry to foreign investment are as follows. Firstly, the gradually fading cost advantages of labor, land, energy and other production factors crippled the ability of China’s manufacturing industry to attract cost-oriented investment, leading to the withdrawal of a number of foreign firms. Secondly, at present, the severe overcapacity of China’s manufacturing industry posed mounting pressure on “capacity cutting”, transformation and upgrading of the industry. This also led to the withdrawal of some market-oriented foreign firms. Thirdly, with the boosted domestic demand of China’s economy and the implementation of policies and measures promoting emerging industry of strategic importance, many foreign firms investing in China’s heavy manufacturing industry started to move out of China. Finally, after the eruption of financial crisis, developed countries scrambled to issue many preferential policies to encourage the re-shoring of their manufacturing sectors and the shoring up of employment, aggravating the decline of foreign investment in China’s manufacturing industry (see Table 1-1, Diagrams 1-3 and 1-4).
Table 1-1 Foreign-invested projects and foreign capital actually utilized in China’s manufacturing industry, 2000–2015
Data Source: China’s Statistical Yearbook and Statistical Communiqués of the People’s Republic of China on the National Economic and Social Development issued by China’s National Bureau of Statistics in 2000–2015.
Diagram 1-3 FDI actually utilized in China’s manufacturing industry, 2000–2015
Data Source: Statistical Communiqués of the People’s Republic of China on the National Economic and Social Development issued by China’s National Bureau of Statistics in 2000–2015.
Diagram 1-4 Proportion of FDI actually utilized in China’s manufacturing industry
Data Source: Statistical Communiqués of the People’s Republic of China on the National Economic and Social Development issued by China’s National Bureau of Statistics in 2000–2015.
1.2.2 Outbound investment quickly rising and net capital output achieved
With the deepening of globalization, Chinese manufacturing firms not only passively accept overseas investment, but also actively make outbound investment. And the trend of this two-way interactive investment is increasingly evident. Outbound direct investment is of great significance for Chinese companies to participate in international competition and cooperation. It can better leverage the resources and markets at home and abroad, and promote the sustained, rapid and healthy development of open economy.
Currently, with a continual increase of national strength, China is accelerating the implementation of the Belt ard Road Initiative and international cooperation on production capacity, and continuously perfecting its outbound investment policy system. Jointly powered by these and other factors, China’s outbound foreign investment has entered into the fast development track. In 2015, China’s outbound foreign direct investment hit a record high of USD 145.67 billion, up by 18.3% year-on-year, higher than the global growth rate.
Since China’s authorities released the yearly data in 2003 for the first time, China’s outbound foreign direct investment had been growing for 13 consecutive years (as shown in Diagram 1-5). The outbound investment in 2015 was 54 times of that in 2002. From 2002 to 2015, it grew at a yearly rate of 35.9%. At the same time, China’s outbound foreign direct investment (ODI) amounted to USD 145.67 billion in 2015, surpassing the amount of the FDI of the same year by USD 10.07 billion, achieving net capital output under the direct investment account for the first time (as shown in Diagram 1-6).
Diagram 1-5 China’s outbound foreign direct investment, 2002–2015
Data Source: 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment issued by the Ministry of Commerce, National Bureau of Statistics and State Administration of Foreign Exchange.
Diagram 1-6 China’s actually utilized foreign capital and outward foreign direct investment, 2009–2015
Data Source: 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment issued by the Ministry of Commerce, National Bureau of Statistics and State Administration of Foreign Exchange.
In the specific case of manufacturing industry, the outbound foreign investment of China’s manufacturing industry has generally maintained a rapid growth. The net annual ODI climbed from USD 620 million in 2003 to USD 19.99 billion in 2015, with an average annual growth rate of 34%. Diagram 1-7 exhibits the moderate growth of ODI in manufacturing industry between 2003 and 2009. However, between 2009 and 2012, in the post-financial-crisis era and before the outbreak of European debt crisis, the growth of ODI was marked by an apparent acceleration. After a short-term decline in 2013, it bounced back with a two-year’s sustained growth and even experienced a super-fast growth in 2015.
Diagram 1-7 Outbound foreign direct investment of China’s manufacturing industry
Data Source: 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment issued by the Ministry of Commerce, National Bureau of Statistics and State Administration of Foreign Exchange.
Since the Reform and Opening-up, Chinese manufacturing firms have gone global and made recognized achievements in their cross-border operations. In general, the outbound foreign investment made by China’s manufacturing industry has the following characteristics:
(1) Continuously
