China must let the world know that it is open for business again.
With a growing number of warning signs suggesting the country’s post-COVID economic recovery is already stalling, Beijing has sent out an obvious “come and invest here” plea to the West.
“I take this opportunity to affirm China’s commitment to opening up,” Premier Li Qiang said at a World Economic Forum event in the eastern port of Tianjin last month, in a not-so-obvious attempt to generate some enthusiasm.
In recent months, Beijing has also welcomed high-profile US-based guests including climate envoy John Kerry, Treasury Secretary Janet Yellen, and Tesla CEO Elon Musk – although the latter’s claim that the ruling Communist Party could one day be replaced by an AI-powered “digital superintelligence” probably wasn’t the sort of reassurance leaders were seeking.
There is an undeniable explanation for why China is talking so much: foreign investment has dried up.
International investors, companies, and governments spent just $20 billion in China in the first quarter, according to the research firm Rhodium Group – down from $100 billion in the first three months of 2022.
Xi Jinping’s iron fist is probably to blame for this huge decline.
At the delayed Communist Party convention last year, China’s president apparently stepped up to the plate, unveiling a new leadership team of political allies and publicly disrespecting his business-friendly predecessor Array.
Frightened investors responded by dumping Chinese stocks in a $6 trillion burst, while China’s domestic yuan fell against the U. S. dollar. (The tightly controlled currency has continued to lose ground against the dollar since then. )
This year alone, Beijing banned chips from U. S. semiconductor maker Micron, sent state police to the Shanghai offices of U. S. consulting giant Bain & Co. and continued its crackdown that wiped out about $1 trillion from the overall market capitalization. of local generation companies. business.
The government has also carried on imposing harsh capital controls that make it tough for foreigners to get their money out of the country – with emerging markets guru Mark Mobius saying earlier this year that he’d be “very, very careful investing in China” due to the restrictions.
None of Xi’s authoritarian, hardline rule speaks to a “commitment to opening up” – so despite its renewed efforts to woo the West, China probably shouldn’t count on foreign investment bouncing back anytime soon.
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