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Saturday, April 20, 2024

China Tries To Woo Investors As Economy Stumbles

China’s financial regulators have invited some of the world’s most prominent investors to a rare symposium next week, seeking to encourage foreigners to keep investing in the world’s second-largest economy despite its recent weakness and rising geopolitical tensions. The meeting in Beijing next Friday will focus on the current conditions of U.S. dollar-denominated investment firms in China and the main challenges facing them, according to the sources who have direct knowledge of the matter and invitation documents reviewed by Reuters. Private equity (PE) fund managers, known as general partners or GPs, and their limited partners, such as sovereign wealth funds and pension funds, will be encouraged to provide suggestions to help address these issues.

The symposium will be led by the vice chairman of the China Securities Regulatory Commission, Fang Xinghai. Investors can submit proposals regarding improving the investment environment in China and be encouraged to share their views on the economy. According to the sources, the meeting is expected to bring together about 150 investment professionals from around the globe. The Asset Management Association of China, the country’s fund regulator, will coordinate the event.

China’s harsh zero Covid policy weighed on economic growth last year, which grew at just 3% – one of the weakest performances in decades. Activity rebounded early this year after the restrictions were abruptly lifted, but policy uncertainty and geopolitical tensions have continued to stoke concern.

Nevertheless, a robust economic recovery this year would restore some optimism among multinationals that have long viewed China as an important market for their products and technology, and that could give the Chinese government some breathing room to pursue bolder reforms. At the December annual Central Economic Work Conference, top leaders signaled a shift from ideology and state interventionism to pro-growth pragmatism that multinationals might welcome.

In addition, the economic clout of global institutions is growing, and many are seeking to strengthen their ties with China to tap its markets. However, China’s enlargement of its international influence has also raised concerns in some countries, including some heavily dependent on the flow of Chinese loans, which often have softer terms than Western ones and can push economically unstable ones into what critics call debt traps.

Survey data broadly shows that while many foreign multinationals view the Chinese market as important to their business today, they no longer view it with unbridled optimism. For example, a recent Teneo survey found that only 20% of prominent company CEOs saw China as the most critical market over ten years. That is down from 50% a decade ago. The meeting comes at a critical time for China’s policymakers. They want to re-establish confidence by implementing stimulus initiatives or relaxing home purchase restrictions. They have until late 2023 to do so when the impact of a slowdown in the United States and Europe will likely begin to bite. Amid these tumultuous times, they will need the support of international investors to continue on their reform journey.

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