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China tasked to save its overseas investments at risk from foreign protectionism and global recession

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China should protect its massive overseas investment interests with more sophisticated and better coordination as protectionism by other nations has escalated and global industrial chains have been affected by the coronavirus pandemic, said Xiao Gang, a former head of the country’s securities watchdog.

Xiao, who is now a senior researcher with the government-backed think tank China Finance 40 Forum, said the global economic recession and stricter national security reviews by foreign governments posed risks to China’s overseas investment.

“The power play between emerging nations and developed countries in free trade and free investment has escalated. The unilateral economic sanctions by developed countries and national security scrutiny regimes have become blocks for outbound investment by developing countries,” Xiao said.

The tightening scrutiny on foreign investments led by developed countries, the rise in trade protectionism and disjointed steps in combating the coronavirus, and shoring up economies would further complicate China’s outbound investment, according to a videoconference speech delivered by Xiao at a forum in Xian in northwestern Shaanxi province last week. The transcript was released on Sunday.

In recent years, China has improved capacity to protect its overseas interests as its investments abroad face rising security challenges but Xiao – who led a report to propose a more sophisticated and coordinated protection framework – said not enough had been done to keep up with the latest global developments.

The US continues to tighten the screws on China’s technology companies, banning market access and cutting research cooperation for national security risks and imposing sanctions on companies because of the South China Sea and other geopolitical issues.

The European Union has expanded the oversight of foreign investment in the bloc to a wider range of industries, apparently vigilant against Chinese state-owned enterprises and overseas investment interests with more sophisticated and better coordination as protectionism by other nations has escalated and global industrial chains have been affected by the coronavirus pandemic, said Xiao Gang, a former head of the country’s securities watchdog.

Xiao, who is now a senior researcher with the government-backed think tank China Finance 40 Forum, said the global economic recession and stricter national security reviews by foreign governments posed risks to China’s overseas investment.

“The power play between emerging nations and developed countries in free trade and free investment has escalated. The unilateral economic sanctions by developed countries and national security scrutiny regimes have become blocks for outbound investment by developing countries,” Xiao said.

The tightening scrutiny on foreign investments led by developed countries, the rise in trade protectionism and disjointed steps in combating the coronaviru, and shoring up economies would further complicate China’s outbound investment, according to a videoconference speech delivered by Xiao at a forum in Xian in northwestern Shaanxi province last week. The transcript was released on Sunday.

https://www.youtube.com/embed/rOgllkOmx2U?wmode=transparent&jqoemcache=qN3lC In recent years, China has improved capacity to protect its overseas interests as its investments abroad face rising security challenges but Xiao – who led a report to propose a more sophisticated and coordinated protection framework – said not enough had been done to keep up with the latest global developments.

The US continues to tighten the screws on China’s technology companies, banning market access and cutting research cooperation for national security risks and imposing sanctions on companies because of the South China Sea and other geopolitical issues.

The European Union has expanded the oversight of foreign investment in the bloc to a wider range of industries, apparently vigilant against Chinese state-owned enterprises.

In April, India changed its investment policies to curb takeovers by Chinese companies. As the 

border stand-off in the Himalayas continues, China’s investments in the country, such as car producers’ plans to build joint ventures, were put on hold.

Xiao also noted that restrictive measures imposed around the world to contain the Covid-19 pandemic had delayed and revoked some investment projects

“Many countries have taken bigger steps toward selective self-sufficiency and shrunk the global layout of some key industries, seeking new balance between efficiency and stability for industrial chains and supply chains, which have added blocks to economic globalisation and is set to lead to profound influence on global capital movement and outbound direct investment,” Xiao said.

SOURCE:scmp.com

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