China must let the world know that it is open for business again.
Faced with a series of signs of caution suggesting that the country’s post-Covid economic recovery is already stalled, Beijing has made a transparent appeal to the West: “come and invest here. “
“I need to 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 an apparent 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 research firm Rhodium Group, up from $100 billion in the first 3 months of 2022.
Xi Jinping’s iron fist is likely to blame for the massive decline.
At the belated Communist Party convention last year, China’s president apparently took power by unveiling a new leadership team of political allies and publicly disrespecting his business-friendly predecessor.
Frightened investors responded by dumping Chinese stocks in a $6 trillion burst, while the Chinese yuan fell against the U. S. dollar. (Since then, the tightly controlled currency has continued to lose ground against the dollar. )
This year alone, Beijing has banned US semiconductor maker Micron’s chips, sent state police to the Shanghai offices of US consulting giant Bain & Co., and pressed ahead with a crackdown that’s wiped an estimated $1.1 trillion off the total market cap of local Big Tech firms.
The government has also continued to impose strict capital controls that make it difficult for foreigners to take their cash out of the country; Emerging markets guru Mark Mobius said earlier this year that he would be “very, very careful about investing in China. ” due to 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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