Xi Jinping of China Eases Foreign Investor Concerns Over Policy Uncertainties

In a bid to alleviate concerns and uncertainties, Chinese President Xi Jinping has recently assured foreign investors of his government’s unwavering commitment to addressing economic issues and unpredictable policy-making. Amid a backdrop of global apprehension, Xi underscored China’s dedication to development, openness, and the protection of foreign investors’ rights during his recent visit to Beijing, as reported by Xinhua News Agency. 

China’s economy has been grappling with a slower recovery pace, particularly post-Covid Zero policies. This has led to intensified efforts by the nation to attract foreign investors. Compounding this situation are the endeavours by Western powers, including the US and Europe, to reduce their reliance on China, thereby creating an air of uncertainty about the country’s future growth prospects.

During the “Summer Davos” dialogue in Tianjin, Chinese Premier Li Qiang spoke emphatically about China’s readiness to collaborate with global entrepreneurs. He cautioned against the politicization of economies, urging CEOs to ensure the security of their supply chains, a sentiment he echoed during his recent visit to Germany.

Insights from Andy Chen, a senior analyst at Trivium China, highlight a unique aspect of Chinese policymaking. According to him, decision-making authority is preferred to be vested with companies rather than foreign governments. This approach allows for a more direct influence on companies, enabling policymakers to incentivize businesses that focus on mitigating risks in specific areas.

Meanwhile, prominent business figures have been making their way to China. Bernard Arnault, CEO of LVMH, recently made his first visit since the onset of the pandemic, meeting local teams in several cities. His visit follows similar trips by other industry leaders such as Jamie Dimon of JPMorgan, Tesla’s Elon Musk, and Tim Cook from Apple.

In a move to bolster ties, New Zealand’s Prime Minister Chris Hipkins also made a recent trip to China. His visit aimed to strengthen the economic relationship between the two nations by fostering new business connections.

Chinese firms have been vocal about the government’s role in promoting investment. Tech companies, in particular, have been encouraged to access capital markets and private financing without restrictions. Fred Hu, CEO of Primavera Capital, emphasized the importance of eliminating obstacles for Chinese tech companies to thrive.

However, the Chinese government’s crackdown on foreign consultancy firms and sudden regulatory tightening measures across various sectors have somewhat subdued the appetite for overseas firms’ investment. This has resulted in foreign capital retreating from China’s financial markets. Despite President Xi’s emphasis on economic development, the government’s increasing focus on national security has become more evident. Consequently, skepticism may overshadow China’s attempts to charm foreign investors.