As Trade War Pinches China, It Opens Doors Wide For Foreign Money | 7/28/2018 | Staff
Mijac (Posted by) Level 3
SHANGHAI/BEIJING (Reuters) – As the Sino-U.S. trade war drags on, Beijing is throwing its door wide open to foreign investors as concerns grow over declining exports, capital flight and persistent yuan weakness.

In the latest of a slew of measures to woo overseas capital, China on Tuesday scrapped the limits on two key inbound investment schemes, even though two-thirds of existing quotas under the scheme remained unused.

Desperation - Funding - Authorities - Charm - Offensives

Also reflecting desperation for overseas funding are authorities’ ramped-up charm offensives to court global executives, and there are plans for a series of conferences targeting Fortune 500 companies.

Arguably, the most eye-catching success was last year, when Tesla Inc obtained generous terms to build the first wholly foreign-owned car plant in China.

Investment - Economy - Impact - Exchange - Rate

“Stabilizing foreign investment will help stabilize the economy, and that will have a direct impact on the exchange rate,” a senior Chinese policy advisor told Reuters.

China’s yuan currency plunged below the key seven-to-dollar level last month to an 11-year-low as trade frictions intensified. The currency has declined over 5% since May.

Investors - Priority - China - Outbreak - Trade

Wooing global investors has become a priority for China since the outbreak of the debilitating trade war last year. U.S. companies, in particular, have become the focus of a tug of war between Beijing and U.S. President Donald Trump, who has exhorted American firms to leave China.

The advisor, who declined to be identified, brushed aside Trump’s “pull-out” directive as “wishful thinking”, arguing that foreign investors would gravitate toward China’s huge market potential and massive consumer base.

Decline - China - Trade - Surpluses - Mainland

But the steady decline in both China’s trade surpluses and direct mainland investments by foreign companies show why Beijing should be pursuing foreign money.

Higher tariffs and growing protectionism mean China will get less and less dollar proceeds from trade, said Wang Peng, an economist at China Development Securities. “If you want to keep a high level of investment in China,...
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