Foreigners poured money into China

Foreigners put more of their money in China last year as the country’s size and growth stood out in a world still trying to manage the coronavirus pandemic.

In the capital city of Beijing, foreign investors claimed more than a third of commercial real estate deals, an increase from prior years.

Beijing is expected to remain a strong choice for foreign investors, particularly as the nation’s capital is predicted to see more signs of recovery sooner than most other major markets overseas.

Covid-19 first emerged in late 2019 in the Chinese city of Wuhan. The disease spread overseas and became a global pandemic within months. However, the outbreak stalled within China by the second quarter after authorities imposed strict measures to limit human contact. The government eased restrictions as local Covid cases dwindled, and China is expected to be the only major economy to post growth for 2020.

The Chinese government would like to attract more foreign capital, whether in business projects or the local financial markets. Such participation contributes to international use of the Chinese currency, while foreign businesses bring jobs, tax income and expertise to the local market.

Businesses also put more money into projects in China last year, as measured by foreign direct investment.

As of November, foreign direct investment for 2020 reached $129.47 billion, more than the same period a year ago, according to official data. That puts China on track for record-high foreign direct investment last year.

Growing foreign interest in China and the capital city of Beijing are part of longer-term trend.

For example, foreign investors have gradually increased their share of transactions in the capital city’s commercial property market. The proportion rose from 22%, or just over a fifth, in 2018, to 30% in 2019 and 35% in 2020.

Over the last several years, China’s rapid economic growth and hundreds of millions of consumers have attracted international consumer brands, automakers and financial institutions. Helping the trend, the Chinese government has relaxed restrictions on foreign investment.

But critics say the changes have come too slowly and unfair practices remain, such as requirements to transfer key technology in order to do business in the country. Beijing’s strict capital controls also make it difficult for foreign investors to take their money out of the country.

At the highest level, Chinese authorities remain publicly adamant about attracting more foreign investment. But international investors are watching whether the opportunity to make money is as good as it sounds.

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