{"id":11690,"date":"2023-02-08T07:30:18","date_gmt":"2023-02-08T07:30:18","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=11690"},"modified":"2025-04-23T09:34:23","modified_gmt":"2025-04-23T09:34:23","slug":"can-foreign-investors-trust-china-in-2023","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/can-foreign-investors-trust-china-in-2023\/","title":{"rendered":"Can foreign investors trust China in 2023?"},"content":{"rendered":"

In an op-ed originally published in Caixin<\/strong>, Tom Simpson<\/strong> writes that as foreign businesses operating in China conclude their damage assessment of the annus horribilis that was 2022 and reset expectations following the sudden scrapping of zero covid, the mood is shifting toward cautious optimism<\/h2>\n

There is widespread relief at the prospect of a more predictable operating environment and the resumption of connectivity with the rest of the world since China dropped its zero covid policy. Recovering the more robust levels of confidence common among foreign investors pre-2019 will now need to be the goal if China seeks to capitalise on its reopening, stabilise, grow levels of inbound investment, and return to the \u201cnew normal\u201d of annual GDP expansion of 5% or above.<\/p>\n

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Initial signs of recovery are beginning to emerge as China\u2019s economy begins to come back to life after a year of heavy disruption. Fortunately for the economy, the impact from the first wave of infections arrived early enough in December and January for the process of recovery to capture a significant chunk of the annual Spring Festival boost to travel, leisure and consumption<\/a> more broadly.<\/p>\n

Travel rebounded strongly over the seven-day holiday up 50.9% on 2021, though still significantly lower than 2019 trip volumes (47%) according to the Ministry of Transport. The box office also sprung back to life with around $1 billion generated over the seven-day national holiday, aided by a strong line-up of domestic films and beating 2019 takings. Data from Meituan indicates a recovery of China\u2019s restaurant sector has also started, with Spring Festival revenues for some chains already recovering to pre-pandemic levels.<\/p>\n

Signals from China\u2019s leadership such as China\u2019s Vice Premier Liu He\u2019s Davos speech, which included a declaration that China\u2019s economy \u2018will get back to normal in 2023,\u2019 have also added further fuel to the relief rally. As have the recent approvals for foreign finance firms to set up or acquire wholly owned mutual funds as well as securities brokerages. One interpretation of this sudden raft of approvals is that they are evidence of a more welcoming stance toward foreign business (and the private sector more broadly). Foreign investors, however, continue to hold a range of concerns that will be more challenging to shake off for the economy than the reversal of zero covid has proven to be, or the lower-hanging fruit of granting approvals.<\/p>\n

Boardrooms are asking more questions of China as the number of fronts that present risk or uncertainty has grown. Whether regulatory, geo-political or the shock of zero covid on the operating environment and supply chains, decision-makers will need to recover the belief that China presents not just growth potential but a predictable enough environment to invest long-term.<\/p>\n