Apple News Facebook Twitter 新浪微博 Instagram YouTube Thursday, Jun 25, 2020
Search
Archive
English>>

Threat of a “complete decoupling” from China remains an unappealing prospect: US media

(People's Daily Online)    11:53, June 25, 2020

(Screenshot from Fortune website)

Trump’s threat of a “complete decoupling” from China remains an unappealing prospect as global appetite for Chinese assets continue to grow, US media outlet Fortune reported on Monday.

Citing a new report by the Rhodium Group, a global consultancy, the article argued that despite the chorus of political decoupling and economic re-shoring talk, as long as China represents a sizable share of global growth, foreign appetite for assets in China will remain robust.

Since two years ago, US President Donald Trump’s administration has stepped up pressure on China with tariffs, and the COVID-19 outbreak has strained US-China relations even further. Trump took to Twitter last Thursday to threaten China with “complete decoupling”.

“However, “over the past 18 months, we have recorded levels of foreign M&A into China that were not seen in the previous decade,” said the report.

The report also finds that foreign investment in China remains resilient. According to China’s Ministry of Commerce, foreign direct investment into the Chinese mainland, in actual use, expanded by 7.5 percent year-on-year to 68.63 billion yuan in May.

The report’s authors, Hanemann and Rosen, argue the big factor behind the global appetite for Chinese assets is that foreign firms are betting on the secular rise of China’s middle class, using for example of Pepsi’s $700 million acquisition of Chinese snack brand Be & Cheery in 1Q 2020.

It also helps that Beijing has loosened restrictions on foreign ownership in key sectors including auto and financial services, enabling global firms to buy shares in their own joint-ventures.

In addition, the report pointed out another factor behind the investment trend is that in some industries, Chinese businesses have now become leaders – partly through the rise of start-ups and government policy support.

“For the first time, therefore, it is attractive for foreigners to buy technology and industrial assets rather than build from scratch,” the authors wrote.

“The market in China is very big and lots of these foreign (corporate) investors, they are looking at the long-term business development in China,” Martin Wong, managing partner of the insurance sector for the financial services industry at Deloitte China, told CNBC.

Even during the COVID-19 outbreak, foreign investment in China has been rising steadily since January and that so far this year the value of foreign M&A deals in China exceeds the value of Chinese outbound deals—the first time that’s happened in a decade.

The article attributed the rising investment to China’s effective response to the virus. “China has been far more effective in containing the virus than Western economies, the China-based operations of global businesses have been able to reopen quickly than operations in North American and Europe,” the article said, adding that China's economy is expected to post solid growth in the second half of this year.

“All of which means that ‘decoupling,’ however sure-fire an applause-getter on the campaign trail, remains an unappealing prospect in many boardrooms,” it said. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Xian Jiangnan, Bianji)

Add your comment

Related reading

We Recommend

Most Read

Key Words