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Xi vows to protect foreign investors in charm offensive

Bloomberg • 4 min read
Xi vows to protect foreign investors in charm offensive
Xi with New Zealand Prime Minister Chris Hipkins on June 27 / Photo: Bloomberg
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Chinese leader Xi Jinping pledged that his nation would do right by foreign investors, underscoring his government’s attempts to assuage worries about the economy and unpredictable policymaking.

“Development is the top priority of the Communist Party of China in governing and rejuvenating the country,” Xi told New Zealand Prime Minister Chris Hipkins during his official visit to Beijing on Tuesday.

“We will continue to vigorously promote high-level opening up and better protect the rights and interests of foreign investors per the law,” Xi said, according to the official Xinhua News Agency.

China’s attempts to encourage foreign investors have ramped up in recent weeks as it’s become increasingly clear that the economy’s recovery following the end of Beijing’s Covid Zero policies is starting to flag. Efforts in the US and Europe to “de-risk” supply chains by reducing their reliance on China have further clouded the prospects for future growth.

At a “Summer Davos” dialog in Tianjin on Tuesday, Chinese Premier Li Qiang told 120 entrepreneurs from around the world that his nation was willing to work with them, Xinhua reported.

Li also delivered a speech at that economic forum warning that attempts by governments to politicize their economies would only fragment the world, and recently returned from a trip to Germany where he urged CEOs there to to take the lead on risk-proofing their supply chains.

See also: Navigating China's markets

“Pushing the decision-making to companies, instead of foreign governments, is seen as the lesser of the evils by Chinese policymakers,” said Andy Chen, senior analyst with consultancy Trivium China.

“With companies in the driving seat, Chinese policymakers could have more points of access to influence the decision-making and make it worthwhile for companies that choose to more narrowly define areas to derisk.”

Meanwhile, Bernard Arnault, the billionaire CEO of LVMH, is making his first trip to China since the pandemic. The French entrepreneur was spotted at a high-end shopping mall in Beijing on Tuesday, the Global Times tweeted, citing photos taken circulating on a social media platform.

See also: Feel the pulse of real China at the street level

The itinerary for Arnault’s entourage includes meetings with local teams in several cities, people familiar with the trip have said, declining to be named discussing the billionaire’s whereabouts.

Arnault’s trip follows visits to China by other high-profile executives in recent weeks, including JPMorgan Chase & Co. CEO Jamie Dimon and Tesla Inc. head Elon Musk. Apple Inc.’s Tim Cook traveled to China in March to celebrate the iPhone maker’s ties to the region.

Besides Xi, Hipkins met the head of China’s legislature Zhao Leji as part of his visit to the Asian nation this week.

“I emphasized the key focus of our visit was to reaffirm our close economic relationship by supporting businesses renew their connections with Chinese counterparts and helping grow new ones to support New Zealand’s economic recovery,” Hipkins said in a statement after meeting the two.

Chinese firms have also stressed the importance of the government’s role in encouraging investment.

“For China to succeed as an innovation powerhouse, it is very important for Chinese tech companies to access capital markets, access private financing, without any impediments,” said Fred Hu, CEO of the Chinese investment firm Primavera Capital, in an interview with Bloomberg Television at the forum in Tianjin.

Hu said his firm hasn’t so far had any issues performing due-diligence, though the firm is paying close attention to recent crackdowns.

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A clampdown this year on foreign consultancy firms that help global investors and multinational firms understand China — part of a nationwide anti-espionage campaign — has weakened the appetite for investment from overseas firms.

That campaign and other government actions likely mean that China’s charm offensive will face skepticism. While Xi has repeatedly insisted that economic development is the Communist Party’s “top priority,” his government has clearly made protecting national security a central focus.

Prior to the consultancy crackdown, abrupt regulatory tightening moves affecting industries ranging from technology to real estate had already been sending foreign capital fleeing from the nation’s financial markets.

A record share of European companies say doing business in China is getting more difficult, according to a recent survey that noted some firms are already following through on plans to divest from the economy. Some American firms have also reconsidered investment.

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