4th Qingdao Multinationals Summit: Opening ceremony
11 October 2023
Your Excellency (Mr.) Hao Mingjin, Vice Chairman of the Standing Committee of the National People’s Congress,
Your Excellency (Mr.) Lin Wu, Secretary of the CPC Shandong Provincial Committee and Chairman of the Standing Committee of the Shandong Provincial People's Congress,
Your Excellency (Ms.) Guo Tingting, Vice Minister of the Ministry of Commerce,
Your Excellency (Mr.) Lu Zhiyuan, Deputy Secretary of the CPC Shandong Provincial Committee and Secretary of the CPC Qingdao Municipal Committee,
Your Excellency (Mr.) Zhou Naixiang, Deputy Secretary of the CPC Shandong Provincial Committee and Governor of Shandong province,
Excellencies,
Ladies and gentlemen,
It is my pleasure to join you today at the opening ceremony of the Fourth Qingdao Multinationals Summit in this beautiful and thriving city.
I first want to express my sincere gratitude to the People’s Republic of China for initiating this Summit as a platform that links leaders from every sector of the global business community.
This year’s edition is of great significance. On one hand, it reflects the challenges the world economy is facing, and on the other hand, it explores the immense potential of interconnection and partnerships for building a world of shared prosperity.
I also thank the event hosts, the Ministry of Commerce of China and the Government of Shandong Province, for inviting me to share my thoughts on the world economy and the development of multinational corporations.
These topics have been core to the United Nations Conference on Trade and Development since its creation nearly sixty years ago. One of the most remarkable changes over the last six decades is the emergence of China as a trade and investment giant of the world. China has been key in creating and fostering numerous and diverse value chains across the globe and constantly moving up the ladder of value addition in its supply chains. And this transformation came with the remarkable achievement of lifting millions of people out of poverty and building a strong and thriving middle class.
This is why China’s development model has been a subject of analysis in UNCTAD and has also influenced our work.
Let me start now with UNCTAD’s perspective on the global economy, focusing on trade and investment trends but also providing you data on China.
The world has gone through turbulent times: The pandemic, trade and geopolitical tensions, soaring food and energy prices, mounting debt burdens and accelerating inflation.
The worst of some of the shocks may have passed, but the road remains bumpy. We expect world economic growth to slow from 3 per cent in 2022 to 2.4 per cent in 2023 with few signs of a rebound next year.
We are concerned about a stalling global economy, with growth slowing in most regions, with only a few country exceptions.
In the case of China, there are signs of recovery from last year with the country having more fiscal policy space than other large economies to address challenges.
The slowdown in global economic growth is reflected in trade growth. While trade reached record levels in 2022, it started decelerating in the second half of 2022 and stagnated this year. This is partly driven by an increased concentration among major trading partners.
This is worrisome for many countries that cannot reap the benefits from international trade. Changes to trade policy could revert this trend, and help to better harness trade as a powerful engine for economic growth.
Let me now switch to the sister of trade: Global foreign direct investment (FDI), largely driven by multinational corporations, and often a predictor of future trade.
With tighter financing conditions and investor uncertainty, global FDI flows in 2022 declined by 12 per cent to 1.3 trillion US dollars. The decline was most acute in developed economies, where FDI fell by 37 per cent. FDI flows to developing countries increased, but the growth was marginal and unevenly shared: FDI flows to many smaller developing countries were stagnant, while flows to Least Developed Countries fell by 16 per cent from an already low base.
Despite the uncertain outlook for global FDI, FDI flows to China increased by 5 per cent, reaching a record 189 billion US dollars in 2022. This growth was particularly prominent in manufacturing and high-tech industries, with a focus on electronics and communication equipment. China's ability to attract substantial investments in these pivotal sectors and its effort in FDI liberalization and facilitation underscores its ongoing appeal to foreign investors. In 2022, China retained its position as the world's second largest recipient of FDI.
Overall, it is encouraging that real investment trends were more positive: Announcements of greenfield projects in developing countries rose by 37 per cent in number, and more than 100 per cent in value. Project numbers increased in infrastructure and global-value-chain intensive industries, including electronics, automotive and machinery.
Yet, in terms of international investment in relevant sectors for the Sustainable Development Goals – the SDGs, such as energy and infrastructure, the gains are modest.
But we see more positive trends in global capital markets. Sustainable funds continue to be more attractive to investors than traditional funds. This can make a potential contribution to the SDGs.
And more investment in SDG relevant sectors is much needed to fulfill our aspirations for development. As it currently stands, we are moving backward not forward on several SDGs:
- Poverty has increased, not decreased. We are back at 2017 levels.
- Hunger is increasing for the first time in decades.
- Gender equality is nearly 300 years away.
We need to revert this trend. Yet, some of the investment patterns are not encouraging, we see signs of stagnant internationalization. While overseas sales of the top 100 multinationals increased by more than 10 per cent, their degree of internationalization - that is, the ratio of foreign to total assets, sales and employment - remained stable. Moreover, many of the largest multinationals became more cautious in investing in new overseas projects, with the exception of the automotive and semiconductor sectors.
If we look at investment policymaking, we observe more policy measures favorable to investment, as countries are making efforts to counter an expected economic downturn. However, the world is witnessing the increasing adoption of investment screening. A balanced approach to policymaking in this area is important for addressing legitimate security concerns without weakening efforts to promote foreign direct investment for sustainable development.
Ladies and gentlemen,
Looking ahead, we stand at a crossroads. On one hand, the global environment for international business and cross-border investment remains challenging and uncertain. On the other hand, we are witnessing a profound transformation of the world economy with an unprecedented acceleration in green technologies, a rapidly evolving transition to service-based economy, and a vast expansion of digital industries. While these trends can pose challenges for business and government policymakers, they also present opportunities for future investment and economic growth.
Addressing many of the challenges and seizing opportunities will depend greatly on cooperation as our world is more interconnected and interdependent than ever.
Common challenges need concerted global efforts and coordinated action of governments, businesses and communities, as well as solidarity and strong partnerships to find solutions that are more equitable, inclusive and sustainable.
China has contributed to cooperation by becoming a major development partner for many developing countries. UNCTAD, with funding of China, could implement various projects on promoting diversification, structural transformation or integration into global value chains.
To be successful in the transitions we need, leaders of multinationals, who gather here today, play also a key role: As one of the main conduits of globalization and driver of economic growth, multinationals can help contribute to sustainable development:
- You are boosting investments in sustainable energy, and can further contribute to accelerating climate action.
- You are leading technological innovations, and can further facilitate its transfer to the places that need them most.
- You are participating in the reconstruction of global value chains, and can place sustainability across global business models, production and supply.
- And you are weaving a complex web of global connections, and can relink the world together.
Ladies and gentlemen,
Here in China, we are very glad to see a commitment to international cooperation through a series of policies that have been introduced, including further investment liberalization and facilitation, removing barriers to trade, and improving the business climate.
I shall also highlight the unremitting efforts of the government of China in the pursuit of sustainable growth and a sustainable future through the development of green technologies and industries.
And a good example is already next to us: the Qingdao Pilot Free Trade Zone is working to develop the blue economy with its innovative measures to attract foreign investment.
To this end, multinationals and other partners can take advantage of China’s development potential and seize the new opportunities presented by China’s economic transition path.
These are opportunities we cannot afford to miss.
I wish this summit great success. Thank you!
