(Lan Qingxin): What is the impact of the measures to restrict investment in China
(Source: "Global Times" Global Network 2020-05-08)
With the global spread of the COVID-19 epidemic, the economies of many countries have been hit hard and the valuation of corporate assets has dropped. In order to prevent foreign companies from taking advantage of the opportunity to buy the country's key assets and technologies, Germany, India, Italy, Canada, Australia, Spain, France, the United States and other countries have recently introduced investment regulations to restrict foreign acquisitions, especially in high-tech fields. Investments must be strictly reviewed. Since Chinese companies have occupied a prominent position in mergers and acquisitions in these countries in recent years, these measures have obvious implications for Chinese investment.
It should be said that investment and M&A are essentially market behaviors taken by enterprises based on their development needs. It is understandable to choose low valuation opportunities to intervene in M&A targets. However, this move by Western countries that have always adhered to the market economy obviously violates the rules of globalization and market economy. Intervening in economic behavior with political means is inherently irrational. In addition, since the outbreak of the epidemic, the United States has taken the lead in "stigmatizing" China, intending to adopt all-round restrictive measures to curb China's pace of opening up and development. The investment restriction measures taken by some countries to take advantage of the epidemic have been obviously affected by it. Coupled with the opposition to Chinese investment and mergers and acquisitions that have emerged in these countries in recent years, we should be wary of the signs behind these restrictive measures that draw lines on institutions and development paths and introduce them into economic competition.
The investment restriction measures adopted by these countries will indeed hinder the pace of overseas investment and mergers and acquisitions by Chinese companies to a certain extent, especially in the high-tech field. But this impact should not be exaggerated. China has become the world's second largest foreign investor. The mutually beneficial and win-win situation of foreign investment has not changed. The effect of foreign investment on China's high-quality development, technological progress and industrial structure upgrading is still obvious. It also provides the host country with more employment, tax revenue and development momentum, and promotes its economic and social development. The intrinsic motivation of Chinese enterprises to explore international markets, layout and reorganization of global value chains has not changed. China's close economic and political ties with other countries around the world have not changed. At the same time, the willingness of foreign enterprises to carry out international cooperation as needed has not changed. Investment restrictions cannot fundamentally hinder investment cooperation and close exchanges between Chinese and foreign enterprises, nor can they hinder the continuous upgrading of China's technological and economic structure.
In addition, China is also the second largest country in the world with foreign investment inflows. The trend of foreign investment flowing into high-tech industries is becoming increasingly obvious. The international cooperation and development of high-tech, technology spillover and technology upgrades will not be changed by certain countries’ investment restrictions. Chinese enterprises continue to accumulate technology and experience in international cooperation and development, and have formed international competitiveness in many fields such as 5G, high-speed rail, cloud computing, etc., and continue to promote it internationally to benefit people around the world and demonstrate their openness. Chinese companies have continued to mature in their internationalization, followed the principles of market economy and competitive neutrality to conduct international investments, assumed social responsibilities, and were well received by host country companies and people. Countries around the world generally regard open development and attracting foreign investment as important ways to promote economic development. Investment restrictions in some countries do not represent the will of their own enterprises and people, let alone the will of all countries. Chinese companies have sufficient room to maneuver on the international stage.
In the face of investment restrictions in some countries, we should maintain full determination and unswervingly promote high-quality open development. The first is to continuously improve the market environment, policy environment and legal environment, shorten the negative list for foreign investment, expand foreign investment access in high-tech fields, create a good business environment, and guide foreign investment into high-tech and modern service industries; second, strengthen consultation with major investment partners and relevant countries, promote the reduction of economic and w88 frictions on the basis of joint prevention and control of the epidemic, and promote globalization; third, encourage enterprises to follow international rules and conduct overseas investments in accordance with laws and regulations; fourth, adopt We should use joint ventures and other means to carry out localized operations, fulfill corporate social responsibilities, and achieve mutual benefits and win-win results; fifth, we should strengthen overseas investment service functions, timely publish information such as investment data, policies, business environment, market demand, and emergency warnings, and provide enterprises with practical assistance in host country policy consultation, legal services, project docking, etc.; sixth, implement investment market diversification, promote the construction of the "Belt and Road", and expand a broader space for international investment.
(Author’s affiliation: w88 casino)
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