For­eign firms need to ad­just them­selves to suit China’s new round of open­ing up

Global Times - - Biz Comment - By Wang Ji­amei The au­thor is a re­porter with the Global Times. bi­zopin­ion@glob­al­

China’s open­ing-up poli­cies are en­ter­ing a new stage as the gov­ern­ment has just an­nounced it would re­lax a broad range of lim­its on for­eign own­er­ship in mul­ti­ple sec­tors.

The Min­istry of For­eign Af­fairs said on Thurs­day that China would start a pi­lot pro­gram to al­low ma­jor­ity for­eign stakes in joint ven­tures in the new-en­ergy ve­hi­cle busi­ness in the first half of next year, Reuters re­ported. At present, for­eign com­pa­nies can hold up to 50 per­cent stakes in car joint ven­tures in China. The Chi­nese gov­ern­ment will also ease or re­move re­stric­tions on for­eign in­vest­ment in fi­nan­cial in­sti­tu­tions such as fund man­age­ment firms, Vice Fi­nance Min­is­ter Zhu Guangyao an­nounced Fri­day.

Giv­ing for­eign cap­i­tal greater ac­cess to do­mes­tic sec­tors of course sig­nals a ma­jor step in China’s open­ing-up. For a long time, some Western me­dia out­lets have fo­cused on top­ics such as for­eign com­pa­nies shut­ting stores in China or the in­creas­ingly tough en­vi­ron­ment for for­eign busi­nesses in the coun­try. But the new de­vel­op­ments in China’s open­ing-up poli­cies ap­pear to con­tra­dict their re­ports. The con­trast only un­der­scores their lack of un­der­stand­ing about China, not to men­tion its re­form and openingup process.

Af­ter more than three decades of re­form and openingup, it is in­evitable for China to ad­just its reg­u­la­tions and rules to im­prove the de­vel­op­ment of its do­mes­tic in­dus­tries and mar­kets. While some of the changes may make some for­eign com­pa­nies feel “un­com­fort­able,” these changes should not be mis­un­der­stood as a step back­ward in China’s openingup to the world.

Chi­nese top lead­ers made it clear at the 19th Na­tional Congress of the Com­mu­nist Party of China that the na­tion will only be­come more open, which is an in­evitable trend in China’s eco­nomic de­vel­op­ment and in line with the de­vel­op­ment needs of the global econ­omy.

Nev­er­the­less, China’s cur­rent re­quire­ments for open­ness are com­pletely dif­fer­ent from those of the past. China’s ba­sic man­u­fac­tur­ing ca­pa­bil­i­ties have seen an over­all im­prove­ment; its fi­nan­cial mar­kets have been fur­ther de­vel­oped, and its reg­u­la­tions have been tight­ened. Given these trend, it is un­der­stand­able for China to raise its re­quire­ments for for­eign in­vest­ment, lead­ing to a cer­tain painful adap­ta­tion for some com­pa­nies.

But there is no need to worry about the ad­just­ment. Com­pa­nies that want to gain a foothold in the Chi­nese mar­ket must have their own strengths and grasp the op­por­tu­ni­ties of China’s eco­nomic de­vel­op­ment. The eas­ing of re­stric­tions on for­eign own­er­ship of elec­tric car com­pa­nies is a good ex­am­ple. With greater mar­ket ac­cess, a mas­sive con­sumer sec­tor and strong gov­ern­ment sup­port, for­eign elec­tric car man­u­fac­tur­ers will surely grow re­mark­ably in China.

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