Li Qiang sends clear message to investors: China is open for business
- Reviewing foreign business leaders’ complaints and removing unreasonable barriers is the right approach and works to their, and China’s, long-term benefit
Foreign businesses in China have long complained about the lack of a level playing field and barriers that prevent them from operating unfettered in its vast market.
Adding to that, tight controls during the pandemic and turbulent trade relations have increased pressure to diversify supply chains and led many foreign firms to doubt their level of commitment to China.
Against this backdrop, the assurances from Premier Li Qiang to foreign business leaders in Beijing is a positive development.
Li told the China Development Forum, which included the CEOs of multinationals including Apple’s Tim Cook and US insurer Chubb’s Evan Greenberg – who incidentally was co-chairman of the forum – that authorities were carefully studying issues raised frequently by businesses, such as market access and public tendering.
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One thorny issue that had been on the list of major concerns for foreign businesses in China – cybersecurity checks that hampered cross-border data flows – saw restrictions eased just last Friday.
It is important that China address concerns from foreign businesses. There was much fanfare when China entered the World Trade Organization in 2001, but for years, discussions about business and trade have regularly devolved into complaints about the country not living up to its WTO commitments.
More recently, draconian quarantine controls dampened sentiment towards doing or expanding business in mainland China.
China has little time to waste. A year after pandemic controls were lifted, the economy is making a sluggish recovery. Li has set an annual growth target of about 5 per cent for a second straight year.
China is embroiled in trade disputes with the United States and Europe over high-end microchips and electric vehicles. High interest rates have led foreign capital to flow to the United States.
Investors have been wary and slow to return. Li set out the case for foreign investors to recommit, stressing that the fundamentals that sustained China’s long-term economic growth were unchanged.
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Li being the messenger may help foreign investors’ confidence. In 2020, when he was Shanghai party chief, China approved the first 100 per cent foreign-owned car factory, a US$2 billion plant for Tesla.
China’s urbanisation rates under 50 per cent represented a huge opportunity, he said. Giving permanent residency to those who had moved to cities would unlock consumer demand for housing, education, healthcare and services for the elderly.
President Xi Jinping is reportedly planning to meet key executives this week, which could offer further assurances. Reminding foreign investors of China’s vast potential is important.
Reviewing foreign business leaders’ complaints and removing unreasonable barriers is the right approach and works to their, and China’s, long-term benefit.
