China premier seeks to reassure investors amid probes

Bloomberg

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remier Li Keqiang pledged to open China more to outside investment and encourage innovation, seeking to counter concerns of a chill after a spate of antitrust probes targeted foreign companies. remier Li Keqiang pledged to open China more to outside investment and encourage innovation, seeking to counter concerns of a chill after a spate of antitrust probes targeted foreign companies.

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Chinese Premier Li Keqiang sought to counter perceptions that his government is making it tougher for foreign companies to operate in the nation, pledging a wider opening to outside investment.
The government will attract more imports, punish intellectual-property violators and treat foreign and domestic companies equally, Li said yesterday at the World Economic Forum in Tianjin, an event attended by executives from companies including Qualcomm Inc. (QCOM) and Marriott International Inc.
A spate of antitrust probes of foreign companies and state-media stories criticizing overseas brands have escalated concern that China, the world’s second-largest economy, is pursuing a mercantilist agenda to boost its own enterprises. With foreign direct investment into China leveling off, Li’s presentation expanded on remarks Sept. 9, when he said firms from abroad have only been targeted in 10 percent of anti-monopoly probes.
“We will keep our policies on foreign capital stable and improve and standardize the business environment to attract more foreign businesses and investment and draw upon and adopt the advanced technologies, mature managerial expertise and fine cultural achievements of other countries,” Li said yesterday.
‘Selective’ action
American and European business groups have issued reports in recent days expressing concern that international companies have faced the brunt of antitrust scrutiny. The American Chamber of Commerce in China called China’s antitrust enforcement “selective and subjective.”
Qualcomm, a strategic partner for the forum, is the target of a National Development and Reform Commission antitrust probe over its licensing business. Speaking at a forum panel yesterday, Chairman Paul Jacobs said the company sees opportunities for growth despite the probe.
In his speech and a subsequent question-and-answer session, Li also said he wants millions of Chinese to start small businesses, adding that the government has cut taxes by 250 billion yuan ($41 billion).
Li reiterated his forecast that China’s economy won’t have a hard landing and can achieve its main economic targets this year even as downward pressure on growth increases. Expansion of slightly above or below 7.5 percent, the government’s target, is reasonable, Li said.
Structural change
He also reiterated the leadership’s commitment to pushing ahead with interest-rate and exchange-rate liberalization and said China will accelerate the development of a deposit-insurance system. Li also pledged to press forward with efforts to clean up the environment after years of tolerating smog as the cost of economic growth. He said China’s carbon intensity was cut by 5 percent in the first half. “There is no turning back in China’s commitment to a sound ecosystem,” Li said.
The premier’s expression of confidence in his economy comes after recent data showed a plunge in the nation’s broadest measure of new credit, a slowdown in industrial production and investment growth, a slumping property market, and a pullback in manufacturing.
Stunted domestic demand has led to declines in imports, leaving China again relying on overseas demand to support its expansion. The country posted a record $49.8 billion monthly trade surplus for August.
Anti-trust probes have intensified foreign companies’ challenges. The European Union Chamber of Commerce last month said in a report that it had received “alarming anecdotal accounts” across industries about intimidation tactics being used.
Rising demand in Southeast Asian economies has enhanced that region as an alternative destination for foreign direct investment. Collective flows to Indonesia, Malaysia, Singapore, Thailand and the Philippines outpaced investment in China last year, according to Bank of America Merrill Lynch.

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