China’s factory base cuts business costs, rolls out red carpet to foreign investors as trade war bites
As the trade war hits Guangdong’s export businesses hard, the province cuts business costs, seeks foreign investment to stabilise the local economy
Guangdong province, the centre of China’s export industry, is redoubling its efforts to shore up domestic manufacturers and woo foreign investors to counterbalance the increasing impact of the trade war with the United States.
The provincial government has updated its foreign direct investment rules to give investors additional incentives to set up plants in the Pearl River Delta, the area just north of Hong Kong that is home to thousands of export businesses, in a desperate move to cushion the economic downturn amid the escalating trade war, economists and industry insiders said.
The government also released a series of moves to cut costs for companies already doing business in the province to help offset the impact of the existing US tariffs on Chinese exports as well as new tariffs that could be announced in the near future.
Guangdong is the first province to roll out a comprehensive set of measures to comply with the Politburo’s direction at the end of July to take steps to stabilise the economy given the downward pressures on growth from the trade war as well as the government’s campaign to reduce risky shadow bank lending.
According to the new foreign investment rules published on Friday, for the first time Guangdong will allow foreign investors to set up wholly owned ventures to manufacture new-energy vehicles, aircraft, drones and other high-end products. Until now, foreign firms wishing to operate in these sectors in the province were required to have a local joint venture partner.
