News ID: 218158
Published: 0142 GMT July 12, 2018

As Trump amps up trade war, China plays nice with foreign investors

As Trump amps up trade war, China plays nice with foreign investors

Long accused of protectionist tactics that make it a difficult place for foreign firms to operate, China is trying to reverse that narrative amid an escalating trade war with the United States, green-lighting huge investments and portraying itself as a champion of openness.

But critics argue that despite its attempt to claim the moral high ground as US President Donald Trump threatens to apply more tariffs on Chinese imports, Beijing’s recent moves to make it easier for foreign businesses to set up operations also effectively acknowledges that it has had discriminatory market barriers, Reuters.com reported.

This week, China agreed to a $10 billion petrochemicals project by Germany’s BASF that will be the first such plant in China that is wholly foreign-owned, not a joint venture.

It also approved a huge new wholly-owned Shanghai factory for US electric car maker Tesla Inc  and a $2.3 billion joint venture organic light-emitting diode (OLED) plant to be built by South Korea’s LG Display Co Ltd.

Responding to the Trump administration’s latest plan to slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, Assistant Commerce Minister Li Chenggang said on Wednesday that China would not close itself to US business.

The recent investment announcements came as Premier Li Keqiang this week visited Germany. The two countries signed commercial accords worth 20 billion euros ($23.5 billion), including the BASF agreement.

Chinese state media framed such cooperation in the context of the increasingly bitter trade dispute with Washington.

In recent weeks, China has issued a shorter list of areas closed to foreign investment, and committed to easing or eliminating foreign equity caps in sectors that include banking, insurance, securities, the auto industry, as well as in shipbuilding and aerospace.

But the string of announcements come at a time when there has been slowing foreign investment into China and more vociferous complaints about Beijing’s market barriers and the difficulty of doing business in the world’s second-largest economy.

Business leaders have been warning that if China didn’t take real measures to address a lack of reciprocal market openness, it would sow retaliatory sentiment among its largest trading partners. And trade hardliners, particularly in the United States, had argued that Beijing would not make good on its pledges until other countries began imposing costs upon Beijing.

Beijing has begun downplaying Made in China 2025, the state-backed industrial policy that has provoked alarm in the West and is core to Washington’s complaints about the country’s unfair trade practices.

And European officials have said Beijing is trying to woo the EU with market access in return for standing with China against Trump’s trade measures, though the Europeans, who share US criticism of China but disapprove of Trump’s tariffs, have largely refrained from taking sides.

   
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