Monday, 04 March, 2024


China implores US firms to invest more in northeast rust-belt region near Russia, North Korea

China wants American firms to invest more in its old industrial base of Jilin province, which borders both Russia and North Korea, to help rejuvenate the state-dominated region amid growing tensions between Beijing and Washington.

Dozens of corporate executives from the United States attended a round-table discussion in Jilin’s capital, Changchun, on Thursday. A total of 55 American companies were represented, including the likes of GE, Honeywell and Cargill.

Ning Jizhe, vice-chairman of the National Development and Reform Commission (NDRC), used the forum as an opportunity to implore American executives to contribute to the development of bilateral relations. A few non-US firms were also there, but the meeting was primarily aimed at connecting with US corporations.

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“It is hoped that US multinational companies in China will seize the opportunity … to fully tap into the development potential of China, northeast China and Jilin province; actively participate in the new dual-circulation development; integrate into regional high-quality development; and jointly write a new chapter in the revitalisation of northeast China and Jilin,” Ning said.

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President Xi Jinping’s dual-circulation strategy aims to cut China’s dependence on overseas markets and technology in its long-term development – a shift brought on by a deepening rift with the US. But Xi’s economic strategy has raised questions about whether Beijing will truly improve market access and level the playing fields for foreign companies.

The current state of US-China relations also presents a significant challenge for American companies, according to the president of the American Chamber of Commerce in China, Alan Beebe, who was also a speaker at the meeting.

While many US companies continue to prioritise their investment in China, there are “some trends” holding them back, Beebe said.

Emphasising the importance of creating a “level playing field”, Beebe added that transparency in the interpretation of China’s regulations and laws is essential for American firms operating there.

Beebe said China’s new anti-sanctions law, for example, has sparked “some uncertainty on how it will be interpreted”. He asked the NDRC to provide more clarification on the scope of the law.

China’s National People’s Congress Standing Committee passed the anti-sanctions law on June 10. The legislation is expected to provide a legal basis for Beijing to counter foreign sanctions. The US has slapped a number of sanctions on 32 mainland Chinese and Hong Kong officials, including the city’s chief executive, Carrie Lam Cheng Yuet-ngor.

Other executives at Thursday’s meeting also echoed Beebe’s comments on the need for transparency in the interpretation of laws and regulations.

“We recommend that the Chinese government encourage and attract foreign investment in semiconductors as much as possible, and not lightly adopt anti-monopoly measures [in the industry], in order to protect and attract foreign investment in China,” said Wang Tong, executive vice-president for Greater China at Samsung Electronics.

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The round-table chat with American businesses in Jilin served as the latest effort spearheaded by the NDRC to demonstrate Beijing’s commitment to “opening up” its markets to foreign investors, and to boost confidence among overseas companies operating in China. The nation’s economic planner outlined key industries in Jilin that it said would benefit from more investment and know-how. These areas include new energy vehicles, farm products, telecommunication and advanced equipment manufacturing.

Zheng Chiping, a deputy with the NDRC’s foreign investment branch, also vowed that US companies would not be singled out when it comes to applying for licences to operate in the financial sector, despite growing US-China tensions. But he acknowledged that there was still a “gap” in offering better market access to foreign companies in general. China maintains a so-called negative list of sectors and industries that are off-limits to foreign investors.

“At the meeting [on Thursday] we felt that US-funded companies were worried about whether they would receive unfair treatment, in terms of access – just because they are US-funded – as a result of the current Sino-US relationship,” Zheng said. “I think that such concern is not necessary.”

Fair competition between Chinese and foreign companies operating in China “is definitely the direction, and it also requires a process”, he added.

One area in Jilin where foreign investment could provide a big boost, especially in terms of advancing automation, is the automobile industry. Changchun has been nicknamed “China’s Detroit”, as it manufactures substantial portions of China’s automobiles.

“From the perspective of the overall competitiveness of the auto industry, we emphasise the need to increase the scale of local supporting infrastructure,” said Ma Yi, a deputy with Jilin’s Department of Industry and Information Technology.

“In smart manufacturing, we ourselves are at the beginning stage … In this field, everyone can make a difference.”

China has stepped up its effort in recent years to reverse the sagging fortunes of its northeast debt-laden rust belt. The three regional provincial governments of Heilongjiang, Jilin and Liaoning have seen sharp declines in revenue amid weak economic performance, while pressure to repay public debts has been mounting.

Among China’s biggest agricultural provinces, Jilin has been one of the northeast region’s better performers in terms of its gross domestic product (GDP) growth post-pandemic.

Jilin’s GDP growth in 2020 was 2.4 per cent, compared with 2019’s 3 per cent. Heilongjiang generated just 1 per cent growth in 2020, down from 2019’s 4.2 per cent. And Liaoning’s growth was 0.6 per cent in 2020, compared with 5.5 per cent in 2019.

A US firm director from the financial industry who attended the round-table discussion in Jilin called Zheng’s assurances “positive”.

“Market access is a long-standing issue,” said the director, who asked not to be identified. “So, we’ll have to wait and see if they’ll do something about it.”

Credit: Yahoo News


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