China's Ministry of Commerce's 20-point 'action plan' to stabilize foreign investment
China's Ministry of Commerce unveils a 20-point 'action plan' to stabilize foreign investment, aiming to attract foreign investors scared off by Xi Jinping's authoritarian tactics. The plan includes measures to encourage equity investment, guide high-quality foreign capital towards long-term investments, and make it easier for foreign investors to conduct mergers and acquisitions in China.
Key Points
- Xi Jinping's authoritarian tactics and trade policies scared off foreign investors
- Foreign direct investment in China dropped by 99 percent over the past three years
- The action plan aims to adjust the calculation of costs and risks of investing in China
- Overseas response to the plan was initially muted
Pros
- Encourages foreign companies to make equity investments in China
- Guides high-quality foreign capital towards long-term investments
- Removes restrictions to allow foreign investment companies to utilize domestic loans for equity investment
- Supports larger-scale foreign investment in China
Cons
- Looming real estate crisis causing reduction in domestic consumer spending