Lujiazui Photo:VCG

Echoing US and Western rules on restricting investment in China, it seems that some Western media outlets are setting off a new wave of pessimism toward the Chinese economy by badmouthing investment confidence in China. But China will hedge the malicious hype with more open policies and attitudes toward foreign investment.

The latest example of this was an article posted on the VOA Chinese website on Thursday, which claimed that some prominent foreign law firms are preparing to cut back or even pull out of their operations in China, because the Chinese economic slowdown and the new Counter-Espionage Law enacted by the Chinese government last month have made foreign companies more uncertain about their future development in the country.

While it is true that some individual law firms, such as Dentons and Latham & Watkins, have recently adjusted their China businesses, seizing on this as an opportunity to play up concerns about a revised Counter-Espionage Law. But badmouthing foreign investment confidence in China only lays bare the ill intentions of some Western media outlets.

It is groundless to criticize the Counter-Espionage Law for creating "uncertainty" for foreign companies in China. An important revision in the new Counter-Espionage Law is to categorize "conducting cyber-attacks, intrusion, interference, control and destruction against state organs, confidential-related units, or critical information infrastructure and etc." as espionage activities. The revision actually responds to national security needs.

There is every reason for China to defend its national security based on laws and regulations, which is actually conducive to providing a better business environment. This should never be a concern for any legitimate business. Normal businesses would never associate themselves with the Counter-Espionage Law, let alone worry about "uncertainty."

Admittedly, as the combination of slowing global growth, rising trade protectionism and geopolitical tensions has increased global investor uncertainty, it is not surprising to see foreign investment in China fluctuate. 

Global foreign direct investment (FDI) fell by 12 percent in 2022, according to a report by the United Nations Conference on Trade and Development. In the first half of this year, actual use of FDI in China totaled 703.65 billion yuan ($98.46 billion), down 2.7 percent year-on-year, the first decline in three years, according to statistics from the Ministry of Commerce (MOFCOM).

These challenges explain why the central government during different meetings has vowed to step up efforts to stabilize foreign investment. Efforts have been made in that direction already. For instance, the State Council in mid-August unveiled guidelines containing 24 specific measures to further optimize China's foreign investment environment and beef up foreign investment inflows. 

Also, China's securities regulator on Thursday granted approval to Allianz Global Investors to set up an onshore fund management company and gave Blackstone's newly established China unit approval to raise funds that will be invested overseas, according to the South China Morning Post.

More efforts are needed from all sides to enhance communication, improve clarity and avoid misunderstanding so as to reduce opportunities for hype driven by ulterior motives. On Monday, the MOFCOM held a policy interpretation roundtable with more than 80 representatives of foreign companies and business associations. The Ministry of Foreign Affairs, the National Development and Reform Commission, the State Administration of Taxation, the State Intellectual Property Office and other departments attended the meeting and conducted the interactive exchanges.

These efforts demonstrate China's sincerity in further opening its market and attracting foreign investment, unleashing regulatory certainty. Foreign investors interested in the Chinese market should take these moves as a signal, not malicious Western speculation that has no basis in reality.