US investors ‘confidently’ pouring money into China despite trade war, says commerce minister
- Direct foreign investment into China from the United States increased by 65.6 per cent in the first quarter of 2019, total foreign investment up 6.5 per cent
- Trade negotiations led by China’s Liu He and Wang Shouwen and US counterparts Robert Lighthizer and Steven Mnuchin to take place this week in Beijing
Increasing investment from the United States highlights a “confidence in China’s economic growth”, said vice-commerce minister Wang Shouwen, after final data showed that US capital inflows increased by 65.6 per cent in the first quarter of 2019 despite the ongoing trade war.
Total foreign investment in the world’s second largest economy hit 242.28 billion yuan (US$36 billion) in the first three months of 2019, an increase of 6.5 per cent compared with the same period last year. Foreign investment in the manufacturing industry reached 75.36 billion yuan (US$11.2 billion), a rise of 12.3 per cent year-on-year, the ministry data showed.
Wang, who along with chief trade negotiator Liu He, is due to engage in the latest round of negotiations with the American trade delegation led by US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin on Tuesday in Beijing.
Preliminary data released on April 18 by Ministry of Commerce spokesman Gao Feng showed US investment in the first quarter of 2019 rose by 71.3 per cent.
Beijing is keen to attract foreign investors, especially big-name companies from electric carmaker Tesla to luxury carmaker BMW, as it tries to maintain China’s place in the global supply chain to thwart speculation that trade hostilities with the US raise the risk of a “decoupling” of the world’s two largest economies.
Investment from European and Asian countries was very strong with German investment increasing 80.6 per cent and South Korean by 73.6 per cent, while inflows from the Netherlands rose 65.9 per cent, Wang said.
American multinational oil and gas corporation ExxonMobil last week confirmed it had signed a 20-year agreement to supply liquefied natural gas to China’s Zhejiang Energy after a framework deal had been announced in October. However, the agreement did not offer details on price, timing and from where the LNG would be supplied from.
In addition to ExxonMobil, Wang also cited large investment from South Korean conglomerate LG, who said in January that it planned to invest a total of 1.2 trillion won (US$1 billion) to expand its two electric vehicle battery plants in China by 2020.
“President Xi has pushed for opening up in manufacturing, services and agriculture [sectors],” said Wang. “We are working with relevant departments on implementing that and our goal is to come up with a negative list by the first half of this year.”
A negative list sets out the sectors in which investment is restricted or prohibited, although China has promised as part of the trade negotiations that the new negative list would cut back investment limitations.
Apart from trade tariffs, China is also facing increasing competition from Southeast Asian countries such as Vietnam and India as the costs of production and wages in China have risen significantly.
The US-India Strategic and Partnership Forum’s (USISPF), a US-based advocacy group, said that around 200 American companies are seeking to move their manufacturing base from China to India after the current general election.
USISPF president Mukesh Aghi told Indian news agency, The Press Trust of India, last week that the group is working with US firms to turn the country into a manufacturing hub.