Li Keqiang tells foreign investors to go after ‘fatter profits’ by reinvesting in China
Speaking at the World Economic Forum in Dalian, Chinese premier also says Beijing will make it easier for businesses to move funds into and out of the country
Premier Li Keqiang said on Tuesday that foreign businesses should reinvest their earnings in China to reap “fatter profits” and promised Beijing would make it easier to move money into and out of the country.
Li told business executives at the World Economic Forum in Dalian that China would widen market access and allow foreign investors to take bigger stakes in joint ventures, its latest efforts to woo long-term capital.
Beijing’s strict controls on outbound payments have met with a chorus of complaints from foreign firms on the mainland. Pan Gongsheng, head of the State Administration of Foreign Exchange, in April spoke to delegates from Sony, BMW, IBM and Visa about tackling fund transfer difficulties.
Li told the forum: “We encourage foreign companies to keep profits ... in China and reinvest them in China ... for fatter profits ... and you will feel that China is the best investment destination.
“I also promise you, for all foreign business profits generated in China, you can move [the funds] freely in and out of China, and there won’t be any limitations.”
He said Beijing would support multinational companies to set up headquarters on the mainland and foreign investment in the country’s northeastern rust-belt region would be encouraged.
The annual Summer Davos, as it’s known, is an opportunity for Beijing to put across a friendly face to the global business community, and Li’s promise of wider market access and equal treatment for foreign firms was in line with Beijing’s previous rhetoric.
In January, President Xi Jinping made a rare appearance at the Swiss resort town, paying tribute to globalisation and free trade, days before Donald Trump’s inauguration as US president – in contrast to Trump’s “America first” approach.
Li said yesterday Beijing would back free trade and globalisation. “Free trade is the foundation of globalisation and a precondition for fair trade – if you limit free trade, there will be unfair trade.”
Despite all the talk, foreign direct investment in China continues to fall. It was down 0.7 per cent in the first five months, according to official data.
Many foreign businesses say they want a level playing field on the mainland. In a white paper, the Japanese Chamber of Commerce and Industry in China last week called for fair treatment, more transparent administrative procedures and a further opening of the market. But in a survey, it found 40.1 per cent of Japanese firms in China wanted to expand, up from 38.1 per cent in 2015.
Li said China’s economy was gaining momentum and there would not be a “hard landing” for growth. He said urban unemployment fell to 4.9 per cent in May – the lowest in many years. He also pledged to cut taxes and streamline administrative procedures, without giving details.