Page 52 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
and new-energy vehicles, design, manufacturing and Mobile announced in September 2018 it plans to invest
maintenance of ships, aircraft, helicopters weighing 3 billions of dollars to build a petrochemical factory in
metric tons and above, unmanned planes and aerostats, Guangdong province as China now allows foreign
construction and operation of gas stations, international investors to control production facilities in the industry.
marine shipping and carriage of passengers by railway. Germany’s BMW and BASF are also increasing their
“The move is to continue to open up the investment investment in China and have set up holding companies
environment in Guangdong, and optimize the industrial in China. And many financial companies from the US are
structure under the new economic situation,” said Chen already acting on the Chinese government’s promise
Yuehua, deputy director of the Guangdong provincial of letting foreign companies to increase their shares
commercial department. Several new measures were from 51 percent to 100 percent in three years in asset
issued around the first of 2019 that were designed to management and securities companies by tilting their
help attract foreign businesses to invest in high-end resources to China (Wu).
industries in the province, a pioneer of China’s reform
and opening-up policy since the late 1970s. In addition, China’s rate of growth will gradually slow over time.
foreign financial organizations will be encouraged to This is inevitable and a characteristic of maturing
set up subsidiary branches and joint-venture securities economies, so it is not cause for concern. The rate of
and fund-management companies, Chen said. Financial slowdown in 2019 will be impacted by a range of factors.
rewards and preferential policies in land use will be The trade conflict is a negative, but the Belt and Road
given to qualified foreign investors, he added. Foreign Initiative is a positive. Contraction caused by one factor
investment in Guangdong grew year-on-year by 3.1 may well be counterbalanced by expansion in the other.
percent, 0.8 percentage points higher than the national Daryl Guppy, an international financial technical analysis
average, to 88.93 billion yuan (US$13 billion) in the expert and special consultant to Axicorp, claims the
first seven months of 2018. Investment from Germany, market should expect to see an expansion of domestic
Japan, Britain and Sweden to the southern Chinese business activity to satisfy growing domestic demand
economic powerhouse grew year-on-year by 49.1 in China in 2019. Domestic demand is changing the
percent, 52.8 percent, 93.8 percent and 12.7 percent, structure of the economy and moving it away from its
respectively, between January and July of the same previous levels of reliance on exports. The increase in
year. The manufacturing sector saw a dynamic growth MSCI weightings for China will attract more investment
in attracting foreign investment. Foreign investment in capital to the market, and this will help reverse the
Guangdong’s manufacturing industry reached 25.62 current Shanghai Index down trends. Many companies
billion yuan in the first seven months of 2018, a year-on- are currently trading below value. This offers good
year increase of 37.9 percent (Qiu). investment opportunities. The government will assist
with tax and fee reductions in selected areas to improve
Wu Jianmin, president and CEO of East West Bank, competitiveness. This, combined with increased credit
insists that now is the time to invest in China, not access for small-and medium-sized enterprises will help
withdraw from the country. Wu claims that China has support and increase innovation and business expansion.
made substantial progress in opening up its market to Guppy suggests that investors need to consider and
foreign investment. Beijing has embraced a “negative list” act on five factors for the 2019 economic outlook. The
model in its administration of foreign capital, and the list first is the Belt and Road Initiative. Investors will look
has become shorter almost every year. Some previously for companies that are actively engaged in the Belt and
taboo sectors, such as electric vehicle and airplane Road Initiative because this is where market expansion
manufacturing, some financial services and agricultural and market substitution will be found. Export industries
industries, are now accessible to foreign investors. will restructure and reorient to serve expanding middle-
Despite the trade frictions, the US’s direct investment in class markets rather than the mature slow-growth US
China increased more than 10 percent year-on-year from market. The Belt and Road will contribute to an increase
January to September 2018, according to the Ministry in infrastructure spending with special purpose local
of Commerce data. In other words, US enterprises have government bonds. Second is Chinese innovation.
increased their investment in the country. Construction Despite attempts by the US to use “security concerns” to
work on Tesla’s US$2 billion electric car plant has reduce commercial competition from Chinese products,
commenced in Shanghai, when completed it will be there remains plenty of opportunity to invest in new
able to produce half a million vehicles a year, and Exxon technology that uses Chinese protocols and standards.
52
and new-energy vehicles, design, manufacturing and Mobile announced in September 2018 it plans to invest
maintenance of ships, aircraft, helicopters weighing 3 billions of dollars to build a petrochemical factory in
metric tons and above, unmanned planes and aerostats, Guangdong province as China now allows foreign
construction and operation of gas stations, international investors to control production facilities in the industry.
marine shipping and carriage of passengers by railway. Germany’s BMW and BASF are also increasing their
“The move is to continue to open up the investment investment in China and have set up holding companies
environment in Guangdong, and optimize the industrial in China. And many financial companies from the US are
structure under the new economic situation,” said Chen already acting on the Chinese government’s promise
Yuehua, deputy director of the Guangdong provincial of letting foreign companies to increase their shares
commercial department. Several new measures were from 51 percent to 100 percent in three years in asset
issued around the first of 2019 that were designed to management and securities companies by tilting their
help attract foreign businesses to invest in high-end resources to China (Wu).
industries in the province, a pioneer of China’s reform
and opening-up policy since the late 1970s. In addition, China’s rate of growth will gradually slow over time.
foreign financial organizations will be encouraged to This is inevitable and a characteristic of maturing
set up subsidiary branches and joint-venture securities economies, so it is not cause for concern. The rate of
and fund-management companies, Chen said. Financial slowdown in 2019 will be impacted by a range of factors.
rewards and preferential policies in land use will be The trade conflict is a negative, but the Belt and Road
given to qualified foreign investors, he added. Foreign Initiative is a positive. Contraction caused by one factor
investment in Guangdong grew year-on-year by 3.1 may well be counterbalanced by expansion in the other.
percent, 0.8 percentage points higher than the national Daryl Guppy, an international financial technical analysis
average, to 88.93 billion yuan (US$13 billion) in the expert and special consultant to Axicorp, claims the
first seven months of 2018. Investment from Germany, market should expect to see an expansion of domestic
Japan, Britain and Sweden to the southern Chinese business activity to satisfy growing domestic demand
economic powerhouse grew year-on-year by 49.1 in China in 2019. Domestic demand is changing the
percent, 52.8 percent, 93.8 percent and 12.7 percent, structure of the economy and moving it away from its
respectively, between January and July of the same previous levels of reliance on exports. The increase in
year. The manufacturing sector saw a dynamic growth MSCI weightings for China will attract more investment
in attracting foreign investment. Foreign investment in capital to the market, and this will help reverse the
Guangdong’s manufacturing industry reached 25.62 current Shanghai Index down trends. Many companies
billion yuan in the first seven months of 2018, a year-on- are currently trading below value. This offers good
year increase of 37.9 percent (Qiu). investment opportunities. The government will assist
with tax and fee reductions in selected areas to improve
Wu Jianmin, president and CEO of East West Bank, competitiveness. This, combined with increased credit
insists that now is the time to invest in China, not access for small-and medium-sized enterprises will help
withdraw from the country. Wu claims that China has support and increase innovation and business expansion.
made substantial progress in opening up its market to Guppy suggests that investors need to consider and
foreign investment. Beijing has embraced a “negative list” act on five factors for the 2019 economic outlook. The
model in its administration of foreign capital, and the list first is the Belt and Road Initiative. Investors will look
has become shorter almost every year. Some previously for companies that are actively engaged in the Belt and
taboo sectors, such as electric vehicle and airplane Road Initiative because this is where market expansion
manufacturing, some financial services and agricultural and market substitution will be found. Export industries
industries, are now accessible to foreign investors. will restructure and reorient to serve expanding middle-
Despite the trade frictions, the US’s direct investment in class markets rather than the mature slow-growth US
China increased more than 10 percent year-on-year from market. The Belt and Road will contribute to an increase
January to September 2018, according to the Ministry in infrastructure spending with special purpose local
of Commerce data. In other words, US enterprises have government bonds. Second is Chinese innovation.
increased their investment in the country. Construction Despite attempts by the US to use “security concerns” to
work on Tesla’s US$2 billion electric car plant has reduce commercial competition from Chinese products,
commenced in Shanghai, when completed it will be there remains plenty of opportunity to invest in new
able to produce half a million vehicles a year, and Exxon technology that uses Chinese protocols and standards.
52
