China’s manufacturing industry “still has irreplaceable advantages” but “must also enhance its core competitiveness and move up the value chain”, it said.
The message came at a time when the world’s second-largest economy has been struggling to invigorate investors both at home and abroad, as growth prospects have been weighed down by challenges from geopolitical tensions and a series of structural internal issues such as a property market crisis and shrinking workforce.
Foreign direct investment in China fell by 29.1 per cent in the first half of this year to 498.91 billion yuan, compared with the same period last year, according to Ministry of Commerce figures.
Henan, whose smartphone exports saw a nearly 50 per cent drop in the first half of 2024 from a year earlier, has been under pressure since Apple ramped up its diversification efforts last year. The American tech giant’s move came after production issues in late 2022, when a mass departure of workers due to coronavirus concerns and violent protests over employee allowances disrupted Foxconn’s operations.
Amid heightened geopolitical risks and enduring concerns over supply-chain disruptions, Apple has moved part of its manufacturing capacity into markets such as Vietnam and India.
Foxconn’s agreement with the Henan government came as an uplifting surprise, with pledges to expedite the implementation of projects in areas such as electric vehicle manufacturing, batteries, digital healthcare, and robotics industrial bases.
In the long run, slower growth will be the new trend, and it’s impossible for foreign investment to keep coming at a high pace
Quoting an unidentified research institute, the Economic Daily said that “even if Apple wanted to transfer 10 per cent of its production capacity from China, it would take about eight years.”
“The reason,” it said, was that “China has a complete industrial-chain ecology, higher production efficiency and more professional workers”.
However, the publication also flagged the need for China to reduce taxes and burdens for enterprises, improve the business environment, and beef up efforts in advanced manufacturing to support its climb toward the high end of the value chain.
Lian Ping, director general of the China Chief Economist Forum – a non-official, non-profit platform for economic and financial analysis in China – said the market has been hyper-focused on every move by multinationals operating in China, as the overall environment now is “complicated and sensitive”.
“If we had said there was not much evidence to be bearish on China in the past, now – with weak domestic demand and the real estate slump – it’s hard to keep saying that,” he said. “In the long run, slower growth will be the new trend, and it’s impossible for foreign investment to keep coming at a high pace.”
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Violence erupts at world’s largest iPhone factory over benefits and Covid-19 controls
Violence erupts at world’s largest iPhone factory over benefits and Covid-19 controls
After encouraging Foxconn to “remain confident in its investment in the region” during July’s signing ceremony, Henan governor Wang Kai made a similar urge to BYD in an August 3 meeting with its CEO, Wang Chuanfu, according to an official readout.
“We hope that BYD will give full play to its advantages in technology, talent and other aspects, further increase its investment in Henan, and promote the establishment of more emerging industries and high-quality projects in Henan,” he said.
BYD’s Wang said the firm attaches great importance to its strategic cooperation with Henan and vows to “make more contributions” to the high-quality economic and social development of the province.