Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
Outbound flights from Beijing were 15 times higher on one travel site within half an hour of Beijing relaxing quarantine requirements on the city
The rebound in bookings spells some hope for online travel providers in China as the country emerges from a pandemic which saw widespread travel restrictions
Passengers arrive from a domestic flight at Beijing Capital Airport on March 27, 2020. Photo: AFP
Within an hour of Beijing downgrading its emergency response level, relaxing quarantine requirements for some arrivals to the Chinese capital city, travel bookings on some sites surged up to 15 times.
Thirty minutes after the announcement on Wednesday, bookings for outbound flights from Beijing were 15 times higher than before the announcement on Qunar, one of the biggest online travel service providers in China. Searches for travel packages and hotel bookings on the platform also increased three-fold, according to a Qunar report.
On Alibaba Group Holding‘s Fliggy travel platform, bookings for flight and trains heading in and out of Beijing increased 500 per cent and 300 per cent respectively one hour after the announcement, compared to the same time a day ago, according to a Fliggy report. Alibaba owns the South China Morning Post.
Bookings for flight and train tickets in Beijing for the upcoming Labour Day long weekend also increased more than 300 per cent and 160 per cent respectively on Chinese group buying site Meituan Dianping on Wednesday after the announcement compared to the day before, while searches for the attractions in the Beijing area on the platform increased almost three times from a week ago, according to Meituan.
“The surge in searches for travel in Beijing was because the lockdown measures in the city were the strictest in the country after work resumed,” said Jiang Xinwei, senior analyst with Analysys. “Consumption among residents was suppressed [during the lockdowns], so there is now a rebound in bookings.”
China’s online travel sites prepare for surge in domestic tourism
21 Mar 2020
The rebound in bookings spells some hope for online travel providers in China as the country gradually emerges from a pandemic which the Chinese government responded to by implementing strict quarantine measures, shutting down tourist attractions and suspending group tours.
Beijing-based consultancy Analysys estimates that China’s national tourism economy lost at least 10 billion yuan (US$1.4 billion) a day on average during the outbreak, with travel service providers like Qunar and Ctrip overloaded with millions of booking changes as well as cancellation and refund requests.
The relaxation of travel restrictions in and out of Beijing also comes ahead of a
, which starts on Friday and is the first extended public holiday after Lunar New Year in late January.
In November, the Chinese government lengthened the holiday from the original three days to five to stimulate consumption and encourage travelling amid a slowing economy weighed down by the US-China trade war.
Some cities, such as Huzhou in eastern China’s Zhejiang province and Kunming in southwestern province Yunnan, have issued travel vouchers to stimulate consumption for the tourist industry, according to the Ministry of Culture and Tourism.
Ctrip estimated that there would be more than 86 million domestic tourists during the long weekend – more than double the number of travellers seen during the Ching Ming Festival in April, which recorded 43 million tourists, according to the China Tourism Academy.
However, Jiang said the rebound this week does not mean the Chinese travel industry is out of the red. “The travel industry will recover partially during the public holiday, but this will not be more than 60 per cent [of levels before the pandemic],” he said. “The government needs to do more to signal that travelling is safe and encourage residents to do so.”
This is the third instalment in a four-part series examining the brewing US-China tech war over the development and deployment of artificial intelligence tech
The US is home to five of the world’s top 10 universities in the AI field, which includes computer vision and machine learning, while China has three
For those Chinese with long-term plans to stay in the US, a major obstacle lies in getting work visas, especially in the current trade war environment. Illustration: Perry Tse
After working in the United States for more than a decade, Zheng Yefeng felt he had hit a glass ceiling. He also saw that the gap in artificial intelligence between China and the US was narrowing.
Last year Zheng, who worked as a researcher at Siemens Healthcare in New Jersey, made a decision that addressed both problems. He accepted an offer to head up the medical research and development team at Tencent’s YouTu artificial intelligence lab in Shenzhen, known as China’s Silicon Valley.
“There was almost no room for promotion if I stayed in the US,” he said, expressing a common dilemma faced by experienced Chinese tech workers in America.
With the US-China trade war leading to tighter scrutiny of Chinese nationals working in the US tech industry, people like Zheng are moving back to China to work in the burgeoning AI sector, especially after Beijing designated AI a national priority. The technology’s varied applications have attracted billions of dollars of venture capital investment, created highly valued start-ups like SenseTime and ByteDance, and sparked a talent war among companies.
That has created an odd symbiotic relationship between the two countries vying for AI supremacy. The US, with its superior higher education system, is the training ground for Chinese AI scientists like Zheng, who obtained a PhD from the University of Maryland after earning bachelor’s and master’s degrees at China’s premier Tsinghua University.
“Many professors in China have great academic ability, but in terms of the number [of top professors], the US is ahead,” said Luo Guojie, who himself accepted an offer from Peking University to become an assistant professor after studying computer science in the US.
Among international students majoring in computer science and maths in US universities, Chinese nationals were the third largest group behind Indians and Nepalese in the 2018-2019 academic year, representing 19.9 per cent, according to the Institute of International Education.
[To build] the best universities is not easy. The university is a free speech space, whereas in China, this is not the case Gunther Marten, a senior official with the European Union delegation to China
The South China Morning Post spoke with several Chinese AI engineers who decided to stay and work in the US after their studies. They only agreed to give their surnames because of the sensitivity of the issues being discussed.
A 25-year-old Beijinger surnamed Lin graduated from one of China’s best engineering schools in the capital before heading to a US university for a master’s degree in computer science in 2017. Like some of his peers, he found the teaching methods in China to be outdated.
“It’s hard to imagine that a final exam of a coding course still asked you to hand write code, instead of running and testing it on a computer,” said Lin, who now works as a software engineer for Google in Silicon Valley.
“Although we still had to take writing tests [in the US], we had many practical opportunities in the lab and could do our own projects,” he added.
A Facebook software engineer surnamed Zhuang had a similar experience at his university in Shanghai.
“Many engineering students [in China] still get old-school textbooks and insufficient laboratory training,” he said. “Engineering practices for AI have been through a fast iteration over the past few decades, which means many Chinese students are not exposed to the most updated knowledge in the field, at least not in the classroom.”
Zhuang also noted out that many classes in China are taught in Chinese, meaning engineering graduates are not fluent in English, the preferred language of the global AI research community.
The US is home to five of the world’s top 10 universities in the AI field, which includes computer vision and machine learning, while China has three. Carnegie Mellon University (CMU) in Pennsylvania ranks No 1 while China’s Tsinghua University is No 2, according to CSrankings, which bases the list on papers published since 2009.
US tech chief: China is threatening US’ lead in global AI race
With its top institutions and an open culture that encourages freedom of speech, including unfettered internet access, the US has become a magnet for the brightest AI students the world over.
In 2018, 62.8 per cent of PhD degrees and 65.4 per cent of master’s degrees in computer science, information science and computer engineering programmes in the US were granted to “non-resident aliens”, according to a survey by the Computing Research Association.
“[To build] the best universities is not easy,” Gunther Marten, a senior official with the European Union delegation to China, said on the sidelines of the World Internet Conference in Wuzhen in October. “The university is a free speech space, whereas in China, this is not the case.”
When these US-educated AI scientists finish studying, most take advantage of a rule allowing them to stay in the country for three years to gain work experience.
Of the foreign nationals taking part in last year’s Conference on Neural Information Processing Systems (NIPS), a major machine learning event for AI professionals, 87 per cent of those whose papers made it to the oral presentation stage went to work for American universities or research institutes after earning their PhD, according to MacroPolo, a think tank under the Paulson Institute.
“China has many great universities and companies, especially in certain subfields of AI such as computer vision, but many people remain hesitant to move to China due to the political environment, quality of life concerns and workplace issues,” said Remco Zwetsloot, a research fellow at Georgetown University’s Center for Security and Emerging Technology (CSET).
China’s PhD students miserable, yet hopeful: survey
Some of the US-trained Chinese AI engineers told the Post they were scared off by China’s “996” working culture: 9am to 9pm, six days a week. Tech firms in China typically expect their employees to work long hours to prove their dedication.
Lin, the Beijinger who now works for Google, used to be an intern at one of China’s largest internet giants. “I worked from the time I woke up until going to bed,” he said, “At Google, I’ve been confused because many people here only work till 5pm but Google is still a global leader.” Lin said he would be happy to return to China if the 996 work culture eases.
Graduates throw their caps in the air as they pose for a group photo during the 2019 commencement ceremony of Tsinghua University in Beijing. Tsinghua ranks as China’s top university for AI. Photo: Xinhua
Chen, a female postgraduate student at Carnegie Mellon, who recently accepted a job offer from Google, once interned at Beijing-based AI unicorn SenseTime, where she worked from 10am to between 8pm and 10pm most days.
A SenseTime spokesperson said the company has adopted flexible working hours for its employees.
Besides a better work-life balance, Chinese graduates look for jobs in Silicon Valley because of the higher pay.
“If you include pre-tax income, many of us get offers that pay more than 1 million yuan (US$142,000) a year but in China the salaries offered to the best batch of fresh undergraduates are about 200,000 to 300,000 yuan (US$28,000 to US$43,000),” Chen said.
Still, for those Chinese with long-term plans to stay in the US, a major obstacle lies in getting work visas, especially in the current trade war environment. Most AI-related workers are on H-1B visas that allow US companies to employ non-US nationals with expertise in specialised fields such as IT, finance and engineering.
However, the number of non-immigrant H-1B visas granted has started to fall since 2016, when it peaked at 180,000, according to the US Department of State, and US tech companies have complained that a policy shift by the Trump administration has made the approval process longer and more complicated.
In 2017, President Donald Trump requested an overhaul of the H-1B visa programme, saying he did not want it to enable US tech companies to hire cheaper foreign workers at the expense of American jobs. He also wants to give priority to highly skilled people and restrict those wanting to move to the US because of family connections.
Science graduates from overseas countries can stay in the US with their student visas for up to three years while competing for the hard to get work visas, which are granted based on undisclosed mechanisms. Overseas students already working in the US can apply for so-called green cards, which offer permanent residency.
After working for a major US tech company for almost three years on a student visa, one Chinese software engineer, who spoke to the Post on condition of anonymity, said she was relocated to the US firm’s Beijing office last year after failing to obtain a H-1B work visa.
“While there might be individual cases, it seems like the current tensions have not – at least as of a few months ago – led to noticeable changes in the overall number of Chinese students staying in the US after graduating,” said CSET’s Zwetsloot.
Some Chinese AI scientists use Twitter to announce their decision to stay. Chen Tianqi, who just obtained a PhD at the University of Washington in Seattle, and Jun-Yan Zhu, a CMU and UC Berkeley alumnus currently working at Adobe, each tweeted that they would join Carnegie Mellon as assistant professors next year.
To achieve the goal of turning China into “the world’s primary AI innovation centre” by 2030, according to a 2017 blueprint issued the State Council, the central government has stepped up efforts to attract US-educated talent.
The Thousand Talents Plan has seen more than 6,000 overseas Chinese students and academics return since its was established in 2008, but because of escalating tensions with the US, Beijing has played down the initiative.
Longer term, Beijing’s willingness to invest significant sums into the AI sector could see more Chinese return for the better employment opportunities. Between 2013 and the first quarter of 2018, China attracted 60 per cent of global investment in AI, according to a Tsinghua University report.
China’s spending on AI may be far lower than people think
Chinese authorities are investing heavily in the sector, with the city of Shanghai setting up a 10 billion yuan (US$142 million) AI fund in August and Beijing city government announcing in April it would provide a 340 million yuan (US$48 million) grant to the Beijing Academy of Artificial Intelligence.
“More and more senior people like me have come back, and some start their own businesses,” said Zheng, the Siemens Healthcare researcher who joined Tencent. “It’s easier for Chinese to seek venture capital in China than in other countries.”
Shanghai’s authorities have doubled the free-trade zone to 240 square kilometres by including part of Lingang, a previously untapped area linked to the Yangshan deep water port
The expansion reflected the city’s renewed efforts to build a free marketplace that can rival regional business hubs such as Hong Kong and Singapore
Aerial photo taken on March 9, 2017 shows the Shanghai free trade zone (FTZ). Photo: Xinhua
Shanghai’s ambitious plan to turn Lingang into a Hong Kong-style free-trade port has yet to impress European companies due to a slow pace of enforcement with a series of liberalisations subject to Beijing’s approval.
The European Union Chamber of Commerce in Shanghai said on Tuesday that the business lobby group was expecting concrete measures to be implemented at the 119.5-square kilometre newly expanded free-trade zone (FTZ), which would whet European companies’ investment appetite, but it also vented dismay towards the slow progress.
It was advisable for the government to carry out planned reforms sooner to convince foreign investors of the golden opportunities inside the zone, said Carlo Diego D’Andrea, the chamber’s Shanghai chairman, who is also vice-president of the EU business chamber in China.
“After so many years [of waiting], we would like to see reform happen soon, not just the talks,” he said in an interview with South China Morning Post.
Shanghai doubled the size of the free-trade zone last month to about 240 sq km by including part of Lingang, a previously untapped area that is linked to the Yangshan deep water port.
The expansion reflected the city’s renewed efforts to build a free marketplace that can rival regional business hubs such as Hong Kong and Singapore.
Shanghai plans to impose zero tariffs on imported goods inside the Lingang FTZ, but the reform measures cannot be implemented unless the General Administration of Customs gives a green light.
Shanghai’s city government had proposed a series of incentives aimed at building Lingang into a world-class investment magnet, the free-trade zone’s deputy director Wu Wei said at a Friday press conference, without elaborating on when the policies might be endorsed by the relevant ministry-level authorities.
Professor Zhou Zhenhua, president of Shanghai Academy of Global Cities, said the central government was still cautious of taking drastic steps in quickly liberalising the Lingang FTZ amid worries of rampant capital and cargo flows.
US bestselling electric vehicle maker Tesla has built its Gigafactory 3 at the Lingang FTZ after it secured an approval from Beijing to establish a wholly owned assembly plant late last year.
The approval for the first wholly-owned foreign car factory on mainland China coincided with a sales drop in the country’s automobile market, the first contraction in nearly three decades.
“Why could not you have opened the market before when the market was booming,” said D’Andrea.
He said that the timing of scrapping the foreign ownership cap amid the first negative growth of the domestic car market in three decades was not enough to show Beijing’s determinations in drawing overseas funds.
Beijing has been harping on its resolution in further opening up the markets to foreign businesses as a way of amid the US-China trade war that began in 2018.
Osaka summit intended to pull bilateral ties away from brinkmanship that has dragged relations to lowest point in decades
Trade war just one of the items on the agenda, analysts say, along with principles of relationship, North Korea, and Huawei
The last time the US President Donald Trump and China’s President Xi Jinping met was in Buenos Aires in December. Analysts are confident that their meeting at the G20 Summit in Osaka this month can yield a freeze in the escalation of the trade war. Photo: Reuters
When Chinese President Xi Jinping meets his US counterpart Donald Trump in Japan at the end of the month they are expected to discuss a broad range of issues, including the trade war, in an effort to stop the relationship from tilting towards sustained confrontation, analysts said.
Neither side has provided an agenda for the meeting on the sidelines of the G20 leaders summit in Osaka, despite confirmation coming from both sides that it was to take place, after weeks of speculation.
A summary of Tuesday’s phone conversation between Xi and Trump published by Xinhua, however, implied that the leaders would cover more strategic issues, leaving the nuts and bolts of a trade deal to their negotiating teams. Meanwhile, China’s foreign ministry spokesperson Lu Kang said at a regular press conference on Wednesday that the two leaders would discuss the overall direction of bilateral relations, but he did not elaborate further.
Both China and the United States have confirmed that their leaders will meet in Osaka at the end of June, at a time when US-China relations have nosedived. Photo: AP
, a former vice-minister at China’s Ministry of Commerce, predicted that Beijing would use the meeting to make clear a few principles regarding the bilateral relationship.
“It’s inevitable [for China and the US] to have problems in certain fields, but both sides should resolve the problems through dialogue on an equal footing rather than opting for a trade war, a tech war, or a financial war,” said Wei, now a vice-chair at the state-backed China Centre for International Economic Exchanges, a think tank.
He added that China would try to convince the US that it had no intention of challenging its global hegemony, but that China’s own “core interests”, including its sovereignty, territorial rights and room to develop, “must be respected”.
A government official in Beijing, who declined to be identified, said China was pinning its hopes on the leaders’ summit to ease general tensions between Beijing and Washington, even though the chances of the leaders reaching any concrete agreements in Osaka was small.
“Without a leaders’ summit, it would be difficult to push ahead the work [to reach agreements] at the ministerial or lower levels,” the source said.
Wei Jianguo, a former vice-minister at China’s Ministry of Commerce, predicted that Beijing would use the meeting to make clear a few principles regarding the bilateral relationship. Photo: Handout
The last summit between Trump and Xi in Buenos Aires in December resulted in a tariff truce and negotiations that continued until early-May. But the talks failed to achieve a deal to end the conflict, resulting in the US more than doubling tariffs on US$200 billion of Chinese imports and threatening tariffs on almost all remaining Chinese imports, valued at US$300 billion by the US government.
he was willing to exchange views with Trump on “the fundamental issues” affecting China-US relations, came at a low point in recent China-US relations.
The tariff increase followed the collapse of trade talks in early-May, while hostile rhetoric has spread into the political and military spheres. The US labelled China a “strategic competitor” and accused Beijing of conducting sustained espionage to impede US’s national security, while China blamed the US for trying to thwart China’s development by targeting Huawei and infringing on China’s sovereignty over Taiwan and Hong Kong.
Zhou Rong, a senior fellow from the Chongyang Institute for Financial Studies at the Renmin University of China, said the two leaders have a long list of issues to talk about this time in addition to trade, including Taiwan, the South China Sea, as well as the treatment of Chinese companies in the US. China can offer to help on some issues but “the US should not force China to swallow bitter fruit it cannot digest”, Zhou said.
Ni Feng, a specialist in Sino-US relations at the Chinese Academy of Social Sciences, said they would discuss the “overall direction” of their bilateral relationship, including where the two nations could engage in “competition and cooperation”.
He added that North Korea may be on the agenda because “China and the US share the same goal of the denuclearisation of the Korean peninsula.”
Another source in the Chinese government, who wished to remain anonymous, said Xi was very likely to bring up the US’ blacklisting of Huawei, China’s leading technology firm. Washington has effectively banned American companies from providing key components to the Shenzhen-based company.
Meng Wanzhou, Huawei’s chief financial officer and the daughter of founder Ren Zhengfei, is currently on bail in Canada awaiting extradition to the US to face charges that both she and Huawei violated US sanctions on Iran.
During Tuesday’s call, Xi told Trump that China “hopes the US side can treat Chinese businesses fairly”, Xinhua reported.
China’s President Xi Jinping waits for the start of the G20 summit in Buenos Aires, Argentina, Friday, Nov. 30, 2018. Photo: AP
At the same time, Trump and Xi agreed that the two countries’ trade negotiators would start to talk again before the meeting in Japan, raising prospects for a second truce in the trade war, or even a deal to end the conflict.
Matthew Goodman, a researcher at the Centre for Strategic and International Studies in Washington, wrote in a note that a Trump-Xi deal on trade-in Osaka “is certainly possible”.
The most likely outcome is similar to the one reached in Buenos Aires in December last year, when Trump and Xi “agreed to a temporary truce while trade negotiators work to hammer out a deal”, Goodman wrote. “This would postpone the worst effects of the current escalation but is unlikely to solve the deepening and dangerous rift in US-China relations”.
The South China Morning Post previously reported that the Osaka summit meeting, which is likely to take place on Saturday June 29, could also be a sit-down dinner between Trump, Xi and their top economic and security aides, as occurred in Buenos Aires. Trump tweeted Tuesday night that he would have an “extended” meeting with Xi in Japan.
Trade talks grinded to a halt last month when Mr Trump accused China of reneging on its promises and raised tariffs on $200bn (£159.2bn) worth of Chinese goods.
The move came as a surprise to many who had thought the US and China were nearing a trade deal. China retaliated with its own tariff hikes.
The Trump administration has threatened to impose tariffs on another $300bn worth of Chinese products if the two sides can’t reach an agreement on trade.
Tariffs on billions of dollars worth of goods from the US and China imposed over the past year have weighed on the global economy and hit financial markets.
Companies ranging from retailers to electronics firms have made submissions to the US trade department warning that more tariffs will hurt their business and consumers.
Still, in his latest comments the US president appeared more optimistic about striking a trade deal.
“I think we have a chance. I know that China wants to make a deal. They don’t like the tariffs, and a lot of companies are leaving China in order to avoid the tariffs,” Mr Trump told reporters at the White House on Tuesday.
Despite moves to resume talks, recent comments from both sides suggest they still remain far apart on many issues.
Sticking points in trade negotiations have included how to enforce a deal and how fast to roll back tariffs.
China produces 90 per cent of the world’s rare earth minerals, used in hi-tech production such as electric vehicles
Rare earth minerals one of the few goods not hit by incoming US tariffs on US$300 billion of Chinese goods as trade war escalates
President Xi Jinping paid a visit to the country’s rare earth mining base in Jiangxi province on Monday, according to the official Xinhua news agency, in his first domestic tour after the trade talks between Beijing and Washington ended without a deal. Photo: Xinhua
Chinese President Xi Jinping visited one of the country’s major rare earth mining and processing facilities on Monday, in his first domestic tour since the
Xi’s visit, reported by the official Xinhua news agency, comes amid growing discussion in China that Beijing could consider banning the export of such minerals as a weapon
Rare earth minerals were among the few items excluded from the latest US government plans to implement tariffs on almost all of China’s remaining exports to the United States, highlighting their strategic importance. These tariffs, which are set to be levied on Chinese goods worth an estimated US$300 billion,
as early as July, according to the Office of the US Trade Representative.
The state media report, which includes one sentence of text and two pictures, made no mention of the trade war, but speculation is mounting that rare earth minerals could form a key part of China’s retaliation.
China is the world’s largest producer and exporter of rare earth minerals, which contain at least one of the 17 rare earth elements, many of which are vital to a number of low-carbon technologies, such as high-performance magnets and electronics. Photo: Xinhua
China is the world’s largest producer and exporter of rare earth minerals, which contain at least one of the 17 rare earth elements, many of which are vital to a number of low-carbon technologies, such as high-performance magnets and electronics.
It accounts for 90 per cent of global production, however the government has been carefully managing mining levels and it was reported last year that amid production quotas, the country became a net importer of rare earth minerals last year.
Jin Canrong, a professor of international relations at Renmin University in Beijing, wrote an article last week suggesting that China could ban rare earth exports to the US as a way to punish the US for
. China does not import enough goods from the US to retaliate in pure tariff terms.
The Chinese government has weaponised the trade of rare earth exports before, slashing the export quota by 40 per cent in 2010. The US, Japan and the European Union filed a compliant against the Chinese quota at the World Trade Organisation in 2012, with the WTO ruling against China. Beijing dropped its export restrictions in 2015.
According to the report, Xi visited JL Mag Rare Earth Co, a major rare earth processing company based in Ganzhou, Jiangxi province and “studied” the local rare earth industry. Ganzhou is the heartland of China’s rare earth mining and processing industry.
Xi was accompanied by vice-premier Liu He, who has been China’s top trade negotiator in the long-running talks with the US and who is Xi’s most trusted economic adviser. Also on the trip was a delegation of company officials and local cadres.
JL Mag is a leading supplier of high-performance rare earth magnets, which are widely used in intelligent manufacturing operations, energy-saving applications, and in the production of robots and new energy vehicles, according to the company’s website.
Images of Xi’s trip show a sign saying that the company is trying to build up “a rare metal industry base of tungsten with strong international competitiveness”.
Banning rate earth exports to the US is one of several ideas percolating in Chinese public discussions of possible trade war
Other analysts have suggested that China could sell its $3 trillion stockpile of US dollar-denominated securities, or allowing the yuan exchange rate to depreciate significantly, which would make Chinese exports cheaper for overseas buyers, helping to mitigate the effect of tariffs.
Issue a key demand made by US President Donald Trump as part of the ongoing US-China trade war
China expected to pass new foreign investment law next week during National People’s Congress
26 Feb 2019
Foreign direct investment in China amounted to US$135 billion in 2018, an increase of 3 per cent from a year earlier, according to Chinese government data. Photo: EPA
Beijing will make it illegal to force foreign investors to transfer their technology to Chinese partners while also lowering market barriers for foreign firms to enter the domestic market, a senior economic planning official said on Wednesday, highlighting an effort to lure overseas investment inflows.
China is expected to pass a new law next week intended to protect the interests of foreign investors, both as a response to demands from the United States that have formed part of the ongoing trade war negotiations, and to help shore up economic growth, which slowed last year to its lowest rate in 28 years.
Foreign investors will be allowed to set up ventures in which they have full ownership, instead of being forced into joint ventures with local partners, in more industries, said Ning Jizhe, a vice-chairman of the National Development and Reform Commission, in Beijing on Wednesday during the National People’s Congress.
In addition, China will set up a special task force to facilitate “key” projects like electric-car maker Tesla’s new factory in Shanghai or BASF’s new chemical complex in Guangdong, both of which are solely owned by the foreign company.
China’s leadership has listed foreign investment as one of the six areas that it must “stabilise” in 2019, along with employment, growth, trade, domestic investment and market expectations.
Foreign direct investment in China amounted to US$135 billion in 2018, an increase of 3 per cent from a year earlier, according to Chinese government data.
But foreign investment into the world’s second biggest economy have slowed over last decade, which could deprive China of access to advanced technologies and marginalise the country in the development of future global supply chains.
Beijing is trying to lure more foreign capital and technology to support its plan to upgrade its manufacturing industries and boost the development of new, hi-tech sectors.
“China will roll out more opening-up measures in the agriculture, mining, manufacturing and service sectors, allowing wholly foreign-owned enterprises in more fields,” Ning said.
China law to protect intellectual property, ban forced tech transfer
Since December, China has been rushing to draft legislation for a new foreign investment law, a key clause of which prohibits local government’s from forcing transfer of technology in return for being allowed to conduct business in their jurisdictions.
The National People’s Congress is expected to endorse the new
“After passing the law, the government will take serious measures to obey and implement it,” Ning added.
He said that China will remove market entry restrictions for foreign investors to ensure that domestic and foreign firms “are treated as equals.”
Ning Jizhe, a vice-chairman of the National Development and Reform Commission. Photo: EPA
However, the jury is still out whether Beijing’s promises of fair treatment, market access and protection for intellectual property rights will be enough to generate a steady inflow of hi-tech investment.
The US has long complained that China has been unwilling to implement previous commitments under the World Trade Organisation to open up its market – allegation Beijing denies.
Shen Jianguang, chief economist at JD Digits, an arm of Chinese e-commerce firm JD.com, said restrictions on foreign investment will exist in China despite the government’s promises.
China’s domestic market remains large and attractive for some foreign investors, he said.
“Foreign investors are still very interested in the Chinese market, if the openness of the economy is sufficient,” Shen added.
CHINDIA ALERT: You'll be living in their world, very soon 