By Laura He, CNN
Hong Kong (CNN) — China wooed a number of top Western companies on Monday with renewed promises to open up its financial industry and create a more welcoming environment as Beijing tries to reverse a record low in foreign investment in the face of mounting economic challenges.
Pan Gongsheng, governor of the People’s Bank of China (PBOC) and head of the country’s foreign exchange regulator, chaired a symposium with representatives from foreign companies, including JP Morgan, Tesla (TSLA), HSBC (HSBC), Deutsche Bank (DB), BNP Paribas, Japan’s MUFG Bank, German chemical producer BASF, commodities trader Trafigura and Schneider Electric, according to a statement posted on the websites of the PBOC and the State Administration of Foreign Exchange (SAFE).
The symposium was intended to “increase financial support to help stabilize foreign trade and foreign investment” and improve the “investment environment” for foreign business, the statement said.
Foreign companies and investors have grown wary of rising risks in the world’s second largest economy, including a worsening slowdown marked by weak domestic demand and a housing crisis, Beijing’s desire to prioritize national security over economic growth and deteriorating relations between China and many Western countries.
In the first eight months of this year, foreign direct investment (FDI) into China fell 5.1% from a year ago, according to data released by China’s commerce ministry on Sunday. A separate measure for foreign investment painted a grimmer picture.
Direct investment liabilities, a measure of FDI reflected in a country’s balance of payments, fell to just $4.9 billion in the April to June months, down 87% from a year earlier, according to data published by SAFE last month. That was the lowest amount in any quarter since records began in 1998.
Both metrics are used by analysts to track foreign investment in the Chinese economy. The SAFE data also includes profits belonging to foreign companies that have not yet been repatriated or distributed to shareholders, as well as foreign investment in financial institutions, according to the government.
On Tuesday, a business climate survey released by the American Chamber of Commerce in Shanghai showed that 40% of respondents were redirecting or planning to redirect investment originally planned for China to other destinations, mainly in Southeast Asia. That compares with 34% of respondents last year planning to redirect investment.
The percentage of companies optimistic about the five-year business outlook was 52%, the lowest in the survey’s history, the chamber said in a statement.
Last month, US Commerce Secretary Gina Raimondo was quoted as saying during a tour of China that some US firms had told her the country had become “uninvestable.”
A spokesperson for the Chinese foreign ministry responded by saying China remained one of the world’s important investment destinations.
Companies that attended PBOC’s meeting called on Beijing to improve its business environment, its statement added.
“[We] will continue to optimize policy arrangements, create a market-oriented, legal and international first-class business environment,” Pan told the companies.
Going forward, the regulators will build a better financial services industry to support the opening up of the economy, he added.
— Michelle Toh contributed reporting.
™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.