While Trump expands trade war, China plays well with foreign investors

BEIJING (Reuters) – Long accused of protectionist tactics that make it a difficult place for foreign companies, China is trying to reverse that narrative amid a growing trade war with the United States, injecting huge investments and portraying itself herself as a champion of the opening.

PHOTO OF THE ARCHIVE: A Tesla car loads at a charging station in Beijing, China, on April 18, 2017. REUTERS / Thomas Peter / Photo Archive

But critics argue that despite his attempt to claim moral ground as president of the United States. UU Donald Trump threatens to apply more tariffs to Chinese imports, Beijing's recent measures to make it easier for foreign companies to establish operations also effectively recognize that it has had discriminatory barriers in the market.

This week, China accepted a $ 10 billion petrochemical project by Germany's BASF, which will be the first plant of this type in China to be wholly foreign owned, not a joint venture.

It also approved a huge new factory in Shanghai for US automaker Tesla Inc, and an $ 2.3 billion organic light emitting diode (OLED) plant to be built by Korea's LG Display Co Ltd. South Korea [19659004RespondingthelastadministrationplanofTrupte109throughouta$200millionprofessionalvalueinChinaimportsinVeliveryMinistryofCommerceLiChenggangsaidtheweekdayChinanwouldclosetobusinesses

"I want to emphasize that the Chinese government's attitude of supporting business cooperation between the two countries will not change, its determination to push for reforms and improve the business environment will not change, and its position to oppose the unilateralism and support multilateralism will not change, "Li said at a business forum in Beijing on Wednesday.

"They are going down, we are going up," he said, in an apparent criticism of Trump while borrowing a phrase used by the former First Lady of the United States, Michelle Obama, in the US election campaign. UU In 2016.

FILE PHOTO: A woman looks at LG Electronics' organic light-emitting diode (OLED) TVs, which are made with LG Display flat screens, at her store in Seoul, South Korea, April 26 of 2016. REUTERS / Kim Hong-Ji / File Photo

The recent investment announcements occurred when Prime Minister Li Keqiang visited Germany this week. The two countries signed commercial agreements 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.

"Trade war should push China and the EU to appreciate mutual cooperation, because this increasingly scarce cooperation is becoming more valuable," China's nationalist tabloid Global Times said in an editorial on Wednesday.

& # 39; PROMISE FATIGUE & # 39;

As the threats in the trade dispute have increased, so do Beijing's signals of what it means to follow up on the reforms. The Chinese authorities insist that there is no link and that it will open at its own pace. The increase in costs is also frustrating for foreign manufacturers in China.

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

But the ad chain comes at a time when there has been a slowdown in foreign investment in China and more vociferous complaints about the market barriers in Beijing and the difficulty of doing business in the second largest economy in the world.

And Beijing is still retaining at least one major acquisition involving foreign companies: the agreement of US chipmaker Qualcomm Inc to buy NXP Semiconductors NV based in the Netherlands. That has been waiting for the approval of China's antitrust regulator for months, which has led to speculation among investors that the deal is being held hostage to the trade dispute with Washington.

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Years of lackluster follow-up by China on its promises of reform have left what many in the foreign business community call "promise fatigue".

Business leaders have been warning that if China does not take real measures to address the lack of reciprocal market opening, it would sow a sense of retaliation among its larger trading partners. And the intransigent, especially in the United States, argued that Beijing would not keep its promises until other countries began to impose costs on Beijing.

The European Union Chamber of Commerce in China President Mats Harborn called Trump's tariffs "hammer approach" on Tuesday but said the root cause of what China has called the "large-scale trade war" "in economic history began in China.

"The reason we are where we are is because the Chinese leaders did not proceed as fast as we wanted as a business community," Harborn said at a press conference.

Some members of the US business community While lamenting the damage caused by Trump's tariffs, they privately say that Beijing's recent emphasis on accelerating reforms may not be a coincidence.

"The tariffs are scathing, the Chinese have less confidence internally than externally, they have never been tested in this way," a US industry source told Reuters, asking not to be identified given the sensitivity of the matter.

Beijing began to downplay Made in China 2025, the state-backed industrial policy that has caused alarm in the West and is at the center of Washington's complaints about the country's unfair business practices.

Propaganda authorities have also issued unusually strict rules limiting local media coverage of the trade war due to concerns that a rampant report could trigger panic and affect their already nervous financial markets, according to state sources Chinese

And European officials have said that Beijing is trying to attract the EU with market access in exchange for backing China against Trump's trade measures, although Europeans, who share US criticism of China but disapprove of tariffs Trump, they have abstained sides.

"By committing to greater openness, I think China hopes it can minimize China's exit from multinational companies," said Louis Kuijs, director of Asia Economics at Oxford Economics based in Hong Kong.

Report by Michael Martina; Additional reports by Elias Glenn and Stella Qiu; Edition of Tony Munroe and Martin Howell


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