How does the world economic recovery look in the second half of 2020 as the pandemic rages on? What is China's economic outlook? What risks lie ahead of China? Steven Alan Barnett, IMF’s Senior Resident Representative of China, suggested at the “New Pattern of China's Economy: Riding the Wind and Breaking the Waves" Summer Summit that COVID-19 has inflicted big economic loss that no economy could stay immune to it.
Lu Ting, Chief China Economist at Nomura, warned us against the long-term impacts of the spreading pandemic, including reshaped global industrial chain and rising production costs. Jin Keyu, tenured professor at LSE and PhD in Economics from Harvard University, explained that being part of a global supply chain, all countries are exposed to the risks. They participate differently in the global value chain - some export raw materials, and some export manufacturing and service industries. The pandemic sends shockwaves throughout the world, with impacts being amplified.
China is showing good signs of economic recovery as the government coordinates efforts of pandemic control and social-economic development. According to the data of National Bureau of Statistics, China's Q2 economic growth beats forecasts after recovering to 3.2% y-o-y. China, as the engine of the world, is restarting its economy. Xiao Gang, former Chairman of the China Securities Regulatory Commission, cited some figures from the ADB and World Bank reports, identifying China and East Asia as the only region with a positive growth rate and the best-performing market in 2020. Also, China will boost the pace of other Asian economies' restoration and lead the world out of the slump.
“China is pressing ahead with reforms to streamline administration and delegate power, improve regulation, and upgrade services, etc., and has seen huge improvements in its business environment.” Huang Qifan, Vice-chairman of the China Center for International Economic Exchanges introduced the recent decisions of the Executive Meeting of the State Council to remove some ownership caps and shorten negative lists. The Meeting has approved the new 2020 national negative list and free-trade-zone (FTZs) negative list for foreign investment, cutting the number of sectors that are off-limits for foreign investors from 40 to 33, and that of prohibited industries in FTZs from 37 to 30. Besides, it has lifted foreign ownership caps on securities, fund management, futures, and life insurance companies. Foreign ownership restrictions in commercial vehicle enterprises have been entirely removed. For agriculture, ownership by foreign investors in wheat breeding and seed production can be raised to up to 66 percent. All these send a good message for foreign businesses to increase investment and strengthen the weak links of the industrial chain.
Huang said, over the past 40 years of reform and opening-up, the Chinese government has maintained strict regulatory oversight in four areas: 1) investment from foreign financial institutions, 2) foreign investment in service trade, 3) foreign investment in public services, including education, health care, culture, etc., and 4) foreign investment in digital economy. But in the recent two years, China has eased share-ratio restrictions and shortened negative lists in the above areas, attracting foreign funds at all levels across a broad range of sectors through multiple channels. These measures will carry great significance.
“We shall open up more sectors to foreign investment and continue to ease service market access restrictions.” According to Huang, China has demonstrated the best global response to COVID-19 and contains the lowest risk for investors. Industrial capital will surely pour in as China opens up even further. Some of the foreign investors will drop the idea of moving their businesses out of China, and even more investment will flow in to complete, expand, and strengthen the industrial chain.
Zhang Yongming Chairman ...
Promoting international trade, promoting utilization of foreign investment, prom...
CCPIT Beijing, a foreign economic and trade organization composed of representat...