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China's charm offensive: Xi Jinping woos foreign investment

2023-12-04T12:06:53.039Z

Highlights: China's head of state and party leader Xi Jinping is suddenly personally fighting for foreign investment in his country. At a meeting of the Communist Party's Politburo this week, Xi demanded that China's legal system "ensure the legitimate rights and interests of foreign companies" The U.S. and Europe are increasingly striving for risk minimization and alternatives to the People's Republic. China has offered international companies the prospect of easing the new rules on cross-border data transfer. The EU Chamber of Commerce is calling for the draft to be adopted as soon as possible.



Status: 04.12.2023, 12:50 p.m.

By: Christiane Kühl

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Xi Jinping at the Asia-Pacific Economic Summit (APEC) in San Francisco: China is courting foreign investors with a charm offensive. © Imago

China is fighting for the trust of foreign companies. Despite skepticism, Xi Jinping promises a market-oriented, legally secure and internationally first-class business environment.

The situation must be serious. China's head of state and party leader Xi Jinping is suddenly personally fighting for foreign investment in his country. At a meeting of the Communist Party's Politburo this week, Xi demanded that China's legal system "ensure the legitimate rights and interests of foreign companies." Beijing must create a "market-oriented, legally secure and internationally first-class business environment," Xi said, according to a report by state broadcaster CCTV.

Xi is usually known for prioritizing security over economics. In surveys conducted by the International Chambers of Commerce, companies have been complaining for several years about the politicization of the business environment and growing requirements. At the end of April, for example, China amended its anti-espionage law to protect not only state secrets, but also very vaguely defined "national interests." This was followed by raids on US market research firms, which caused uncertainty. The companies also criticize new bureaucratic hurdles for sending data abroad, which require expensive measures.

China reacts to the West's de-risking policy

China certainly senses that all of this is making a difference abroad. The U.S. and Europe are increasingly striving for risk minimization and alternatives to the People's Republic. To this end, Federal Chancellor Olaf Scholz and Economics Minister Robert Habeck travelled to Singapore a year ago specifically for the Asia-Pacific Conference (APK) of German business. "China plus X" is the motto. India is also coming into play as an alternative location. In the third quarter, the People's Republic reported net negative foreign direct investment for the first time since 1998. In addition, China's economy is only slowly recovering from the pandemic.

With the new charm offensive, the government wants to restore the trust that has been lost. "We are ready tobuild closer partnerships with all countries in the fields of production and industrial supply chains," Premier Li Qiang said on Tuesday at the opening of a new supply chain exhibition in Beijing. "Foreign executives here are desperate to continue in China," Michael Hart, president of the U.S. Chamber of Commerce in China, told Reuters the other day. "But our boards in the U.S. are skeptical."

Xi personally solicits investment in the U.S.

Xi Jinping himself had courted investors at the summit of the Asia-Pacific Economic Cooperation (APEC) in San Francisco. China's determination to promote a world-class market-oriented business environment "will not change," Xi vowed in a written speech at the APEC business leaders' meeting (CEO Summit). "We invite friends from the business world from all over the world to invest in China and strengthen their presence there." China will generate a third of global growth this year, Xi said. So far, Beijing is sticking to its growth target of five percent for 2023.

However, fine-sounding speeches are not enough to convince entrepreneurs. For this reason, China has offered international companies, for example, the prospect of easing the new rules on cross-border data transfer. The EU Chamber of Commerce is calling for the draft to be adopted as soon as possible. It would be a first signal that China's invitation to foreign companies is serious.

Source: merkur

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