Economy

Stocksak: China’s new Xi term causes concern for foreign business groups


© Stocksak. FILE PHOTO: Li Qiang Zhao Leji and Wang Huning are the new members of the Politburo Standing Committee.

By Josh Horwitz

SHANGHAI, (Stocksak), Monday: Overseas business associations in China expressed concern over President Xi Jinping’s newly unveiled leadership team. They also expressed concerns about his stated priorities. Some called for more state intervention in the market.

Eric Zheng is the president of Shanghai’s American Chamber of Commerce. He told Stocksak that the chamber was “encouraged” by Xi’s speech at the Communist Party Congress on Sunday.

“But, at a moment when China’s economy is facing a difficult environment, we are concerned about the use of non-market instruments such as government subsidies for support the state sector could prove counterproductive,” he stated.

Xi secured a record-breaking third leadership term and established a new Politburo Standing Committee stacked by loyalists. This triggered a sharp fall in mainland and Hong Kong stocks, as investors bought on fears that economic growth would have to be sacrificed for ideology driven policies.

The European Union Chamber of Commerce in China stated in a statement that it was waiting to see the impact of Congress. Major policy announcements will likely not surface until March 20,23, when party members convene for the annual “two sessions.”

Although the European business group was positive about Xi’s comments on environment protection, it stated that it needed more clarity on China’s intentions to reform and open itself up. It also asked for clarification on how China would “stay autonomous and self-reliant”.

It said that “it is not clear how these statements can be reconciled” in practice.

Steve Lynch, managing director of British Chamber of Commerce in China, stated that although there was some continuity in the congress’ remarks, the chamber had seen “considerable changes” in certain policies and had to wait to see how these would be implemented.

China’s overseas companies have been increasingly critical about policies like the tough zero tolerance stance on COVID-19. These businesses claim it discourages investment and hinders foreign staff recruitment.

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