Chinese thinking of liberalising sectors

CHINA has indicated it may relax restrictions on foreign investment in some sectors as it struggles to balance an overseas exodus of capital and faces accusations of protectionism from US President-elect Donald Trump.

A record-setting wave of Chinese investment abroad has raised mounting concern in Beijing over capital flight, reckless spending overseas, and the yuan currency’s fall against the US dollar.

A notice from China’s economic planning agency late on Wednesday said foreign investment restrictions could be lifted in sectors such as automotive electronics, rail transport equipment, some mining, agricultural and chemical production, theme parks and golf courses, as well as some service-industries.

Such notices typically result in policy changes.

Citic Bank International’s chief China economist Liao Qun said the circular from the National Development and Reform Commission (NDRC) was prompted by concern over capital outflows.

China’s foreign exchange reserves plunged by $69 billion in November to a fiveyear low, according to data released Wednesday, with analysts blaming capital flight and the government’s selling of foreign currencies to support the yuan.

“They were going to open up restrictions for foreign investment anyway, but they are doing this in advance because they want more money to come in to balance out the falling foreign exchange reserves, which have been falling too fast this year,” Liao told AFP.

Taking aim at the problem of capital leaving the flagging Chinese economy in search of better investments, authorities have also stepped up rhetoric against what the Commerce Ministry this week called “irrational” overseas investments, and have taken various steps to curb money outflows.

Looking to boost domestic consumption, in 2015 Beijing slashed tariffs on a range of imported products, from shoes to cosmetics and certain items of clothing.

Earlier this week, Trump took aim at Chinese trade and fiscal policy in a pair of tweets that accused the country of manipulating its currency and hitting US exports with heavy taxes.

He has pledged to ramp up import duties on Chinese goods based on the belief that Beijing continues to “heavily tax our products going into their country”.