China's red carpet draws CEOs but few expect their money to follow
© Reuters. FILE PHOTO: Chinese Vice President Han Zheng speaks at the Invest in China Summit 2024, in Beijing, China March 26, 2024. REUTERS/Tingshu Wang/File PhotoBEIJING - China's government devoted the week to a red carpet welcome for foreign executives to try to halt a retreat in corporate investment from a market once seen as the engine of global growth.
Foreign direct investment represents only 3% of total investment in China, but it has been falling for two consecutive years. Investment from overseas has been seen as a signal of confidence in the world's second-largest economy and a way to sharpen the competitiveness of Chinese firms. Chinese companies with government ties have also managed to avoid the profit-and-loss discipline foreign investors face, leading to crushing overcapacity in industries such as vehicle production, executives said.
Other attendees and analysts said a sense of promise fatigue has set in for investors. China's cabinet has since August announced at least 48 measures intended to restore foreign investor confidence. He Yadong, a commerce ministry spokesperson, said the presence of so many multinational companies in China this week showed"the strong 'magnetic attraction' of the Chinese market".Still, the meetings gave companies a window to make their case. U.S. pharmaceutical and life science companies used the China Development Forum to voice concerns on how China's data regulations hurt their ability to compete, attendees said.
The country's second-ranking official, Li Qiang, skipped meeting with visiting CEOs at CDF this year, an established channel since the event began in 2000."It is an awkward signal to other investors and showcases how strategically and selectively China chooses to engage with international companies," said Max Zenglein, chief economist at MERICS, a Berlin-based China studies institute.
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