Beijing says the country is a ‘safe harbor’ after its rapid recovery from the pandemic
Ivanhoé Cambridge, a group that invests in international property on behalf of the Quebec state pension system, had already put $2bn into China’s logistics sector over the past few years. In June, as coronavirus was raging across the world, it decided to add another $400m to the total. “We’ve certainly been trying to increase our exposure to logistics in China as quickly and as responsibly as we can,” said George Agethen, senior vice-president, Asia Pacific, at the Canadian company, who points to a “difficult environment” in which to make an investment decision. “The interest to invest in China and China logistics is . . . everywhere,” he added. “There’s not a single investor I know who doesn’t think it’s a good idea.” Foreign direct investment into China plummeted at the start of the year when coronavirus emerged within its borders. But its rapid recovery from the pandemic, as well as the chaos the virus has wrought elsewhere, is now encouraging a flood of money into the country.
That shift could support China’s longer-term plans to expand domestic consumption and gradually liberalize foreign involvement in its industries even after it has cracked down on some of its biggest conglomerates and the outward capital flows they fuelled over the past decade. Official data show that foreign direct investment in China rose in October for the seventh straight month, jumping 18 percent year on year to Rmb81.9bn ($11.8bn). Last month Zong Changqing, an official at the Chinese commerce ministry, said investors saw the country as a “safe harbor”.
Rising FDI echoes a wider rush of funding into China’s financial markets on the back of its recovery, which has helped push the renminbi to its highest level in years. The economy is expected to grow 2 percent this year, compared with declines elsewhere. “What it’s showing is China is an attractive investment location in the same way it’s attractive for portfolio flows,” said Alicia García-Herrero, chief economist for Asia-Pacific at Natixis. “Overall its relative growth is better and its return is higher”.
