Amid trade war, China plays nice with foreign investors | The Daily Star
12:00 AM, July 13, 2018 / LAST MODIFIED: 12:00 AM, July 13, 2018

Amid trade war, China plays nice with foreign investors

Long accused of protectionist tactics that make it a difficult place for foreign firms to operate, China is trying to reverse that narrative amid an escalating trade war with the United States, green-lighting huge investments and portraying itself as a champion of openness.

But critics argue that despite its attempt to claim the moral high ground as US President Donald Trump threatens to apply more tariffs on Chinese imports, Beijing's recent moves to make it easier for foreign businesses to set up operations also effectively acknowledges that it has had discriminatory market barriers.

This week, China agreed to a $10 billion petrochemicals project by Germany's BASF that will be the first such plant in China that is wholly foreign-owned, not a joint venture.

It also approved a huge new wholly-owned Shanghai factory for US electric car maker Tesla Inc, and a $2.3 billion joint venture organic light-emitting diode (OLED) plant to be built by South Korea's LG Display Co Ltd.

Responding to the Trump administration's latest plan to slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, Assistant Commerce Minister Li Chenggang said on Wednesday that China would not close itself to US business.

“I want to stress that the Chinese government's attitude to support business cooperation between the two countries will not change, its determination to push forward reforms and improve the business environment will not change, and its stance of opposing unilateralism and supporting multilateralism will not change,” Li said at a business forum in Beijing on Wednesday.

“They go low, we go high,” he said, in an apparent jab at Trump as he borrowed a phrase used by former US First Lady Michelle Obama in the 2016 US election campaign.

The recent investment announcements came as Premier Li Keqiang this week visited Germany. The two countries signed commercial accords worth 20 billion euros ($23.5 billion), including the BASF agreement.

Chinese state media framed such cooperation in the context of the increasingly bitter trade dispute with Washington.

“The trade war should push China and the EU to cherish mutual cooperation, because this increasingly scarce cooperation is becoming more valuable,” China's nationalist tabloid, the Global Times, said in an editorial on Wednesday.

As the threats in the trade dispute have increased, so too have signals from Beijing that it means to follow through on reforms. Chinese officials insist there is no link, and that it will open up at its own pace. Rising costs are also frustrating to foreign manufacturers in China.

In recent weeks, China has issued a shorter list of areas closed to foreign investment, and committed to easing or eliminating foreign equity caps in sectors that include banking, insurance, securities, the auto industry, as well as in shipbuilding and aerospace.

But the string of announcements come at a time when there has been slowing foreign investment into China and more vociferous complaints about Beijing's market barriers and the difficulty of doing business in the world's second-largest economy.

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