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People’s Bank of China courts foreign firms as economic challenges deepen

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Hong Kong

China will open its financial sector and make its business environment more favorable to foreign companies, the country’s central bank governor told several major Western companies on Monday, renewing Beijing’s efforts to attract foreign capital as economic challenges worsen. ’emphasize.

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 of foreign companies, including JP Morgan, Tesla (TSLA), HSBC (HSBC), Deutsche Bank (DB), BNP Paribas, the Japanese bank MFUG, the German chemical producer BASF, commodities trader Trafigura and Schneider Electric, according to a statement published on the websites of the PBOC and the State Administration of Foreign Exchange (SAFE).

The symposium aimed to “increase financial support to help stabilize foreign trade and foreign investment” and improve the “investment environment” for foreign companies, the statement said.

Foreign businesses and investors are increasingly wary of growing risks in the world’s second-largest economy, including a slowdown marked by weak domestic demand and a housing crisis, Beijing’s push to prioritize national security over ‘to economic growth and the deterioration of relations between China and many Western countries.

In the first eight months of this year, foreign direct investment in China fell 5.1 percent from last year, according to data released by China’s Ministry of Commerce on Sunday. A separate measure for foreign investment painted a bleaker picture.

Direct investment commitments fell to just $4.9 billion between April and June, an 87% drop from the previous year, according to data released by SAFE last month. This is the lowest amount ever recorded in records started in 1998.

On Tuesday, a business climate survey released by the American Chamber of Commerce in Shanghai showed that 40% of respondents were redirecting or considering redirecting investments originally planned in China to other destinations, mainly in Southeast Asia. . This compares to 34% of respondents last year planning to shift their investments.

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, U.S. Commerce Secretary Gina Raimondo reportedly said during a tour of China that some U.S. companies had told her the country had become “uninvestable.”

A Chinese Foreign Ministry spokesperson responded by saying that China remains one of the world’s top investment destinations.

Businesses who attended the People’s Bank of China meeting called on Beijing to improve its business environment, the statement added.

“(We) will continue to optimize policy arrangements and create a market-oriented, first-class legal and international business environment,” Pan told the companies.

Going forward, regulators will build a better financial services sector to support the opening of the economy, he added.