Nation’s ability to draw capital called unshaken

China’s ability to attract foreign capital will not be shaken by certain global companies’ relocation moves as its market space, supportive government policies and advanced industrial supply chain will retain its market vitality, experts and business leaders said.

They commented after Forbes reported over the weekend that White House economic adviser Larry Kudlow said the United States could lure its companies to move back from China “with full immediate expensing”. Japan also announced that it would spend up to $2.2 billion to move some Japanese firms’ overseas plants either back home or to Southeast Asian economies.

It is not surprising for some multinationals to transfer part of their manufacturing facilities from China to other locations due to factors such as costs and shifting of their priority market, said Zhang Yansheng, a researcher at the China Center for International Economic Exchanges.

But in March, Toyota Motor Corp announced that it will build a new electric vehicle plant in Tianjin and Starbucks pledged to invest $130 million to construct a roasting facility in Kunshan, Jiangsu province. Zhang said China’s comprehensive advantages based on efficiency, labor quality, resources and digital and physical infrastructure will continue to attract investment from global companies over the long term.

Robert Aspell, group leader of Cargill Inc’s Agricultural Supply Chain, said on Monday that China is of significant importance to the US-based global company in this highly unusual time. The COVID-19 epidemic may cause logistics and supply chain issues for the global food Industry, but Cargill, with operations in 65 countries and regions, will continue to invest in China.

“We have growth plans for our business across different sectors, such as protein, food ingredients, agriculture supply chain and animal feed in China,” said Aspell, who is also Cargill’s president for the AsiaPacific region.

General Mills, the US manufacturer of branded consumer foods, emphasized that China is one of the company’s few core markets, which has not changed with the outbreak. The company will continue to expand its business across the country, it replied to China Daily in a statement on Monday.

Apart from dealing with the availability of upstream and downstream supply chains, some US businesses moving back home also have to face the reality of leaving China’s lucrative consumer base to their global competitors, said Chen Wenling, chief economist at the China Center for International Economic Exchanges.

Forbes’ report also pointed out that to return those companies’ supply chains to the US would, in most cases, require hefty capital expenditures.

Robin Xing, Morgan Stanley’s chief China economist, said the COVID-19 outbreak will prompt industries to put more emphasis on digital infrastructure development in the next stage, especially in areas such as the internet of things, cloud computing and 5G. China’s advantages in those areas will be strengthened rather than weakened, Xing said