Profit, not political baton, decides capital flow

In an interview during the annual session of the National People's Congress, the top legislative body, on Monday, Minister of Commerce Zhong Shan stressed that foreign businesses will not pull out of China's huge market.

Latest Ministry of Commerce data show that in April, the actual use of foreign capital nationwide was 70.36 billion yuan ($9.8 billion), up 11.8 percent from the year before. A Ministry of Industry and Information Technology survey shows about 40 percent of foreign enterprises want to increase investment in China in the near future, meaning China remains a favored foreign investment destination.

Foreign businesses have not only played an important role in helping China become the world's second-largest economy and the largest trader in goods, but also benefited a lot from it. Take Apple for example. Figures show that the Chinese market accounts for 25 percent of Apple's revenue, second only to the US and European markets. That's why Apple moved 90 percent of its production to China years ago. It can be said that Apple's market is inseparable from the huge Chinese market.

The Chinese market remains very attractive to foreign investors because it has a huge consumer base and a highly cost-effective workforce that can meet the needs of different foreign businesses. Besides, China is committed to deepening reform and opening-up and improving its business environment to effectively protect the rights and interests of foreign investors through its Foreign Investment Law and the "positive and negative list" system. Finally, the rule of law and an improving service level have also created an excellent business environment for foreign businesses.

China is a global manufacturing hub and foreign investors have benefited from participating in initial low-end manufacturing or later high-value-added manufacturing in China. The country has provided global transnational capital an excellent experience of creating wealth and profits and also benefited from the international division of labor. That means even though China is undergoing industrial transformation and upgrading from a manufacturing power to a smart manufacturing power, foreign investors still have huge commercial interests in the Chinese market.

Foreign businesses and investors thus have a stake in the Chinese market. Staying in China means they continue to enjoy the benefits of China's industrial transformation and upgrading, and leaving means they have to not only rebuild the supply chain, but also find a better business environment. Global capital flow hinges on pursuit of profit, so it is impossible for it to be directed by politicians' batons.