CCP Aims to Increase Foreign Investment at ‘Two Sessions,’ US Ambassador Expresses Doubt
The Chinese Communist Party (CCP) has identified attracting foreign investment as a key objective during its recent Two Sessions top political meetings, where discussions centered around the struggling Chinese economy.
However, skepticism from the international community, including the U.S. ambassador to China, has been raised due to conflicting policies adopted by the CCP.
In its government work report from the Two Sessions, the CCP emphasized the importance of promoting foreign trade and ramping up efforts to attract foreign investment.
Amidst the ongoing economic decline caused by China’s handling of the COVID-19 pandemic, various challenges persist, such as a stagnant real estate market, high youth unemployment, sluggish domestic demand, and a supply chain shift away from China. This has led to major Chinese real estate companies defaulting one after another, exacerbating the economic situation for the CCP.
To address these economic challenges, the CCP attempted to attract foreign investment during the Two Sessions, citing a focus on institutional opening up to enhance financial access from the outside world. Moreover, the CCP announced the removal of several restrictions for foreign firms in the financial sector, aligning their business scope with that of Chinese enterprises.
Despite these efforts, international financial firms have downsized their operations in China and withdrawn investments. For instance, Morgan Stanley IM China laid off employees amid declining assets and operating losses.
Michael Cembalest of J.P. Morgan Asset Management labeled China’s stock market a “value trap,” cautioning against investing in China. Similarly, Sharmin Mossavar-Rahmani of Goldman Sachs advised against investment in China due to policy ambiguities and inconsistent economic data.
Wang He, a U.S.-based commentator, highlighted the diminishing profitability for Wall Street giants in China, pointing to alternative investment opportunities in Southeast Asia, India, and the recovering Japanese economy.
Ambassador Burns’ Concerns
U.S. ambassador to China Nicholas Burns expressed concerns on March 14 about American companies hesitating to expand their investments in China due to conflicting signals from CCP authorities.
Burns cited raids against U.S. auditing firms and China’s new counter-espionage law as deterrents for investment, noting the uncertainty surrounding national security in China.
He added that many companies lack clarity on China’s economic direction and policies, making them hesitant to make significant investments. While few companies are leaving the Chinese market due to its size and importance, many have contingency plans in place.
