"Negative FDI": Firms, sovereign funds pull out of PRC; Beijing may give weapons to Russia for Ukraine war effort & China-wide protests likely to increase with budget cuts -- China Boss News 2.20.23

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"Negative FDI": Firms, sovereign funds pull out of PRC

“After almost seven years of a consistent rainfall of money, companies are pulling capital out of the country, resulting in ‘negative’ foreign direct investment,” Forbes’ Brandon Kochkodin reported.

Forbes:

The shift comes even after China attracted hundreds of billions of dollars from foreign companies throughout the height of the pandemic, according to data from [Jens] Nordvig’s company Exante Data.

Nordvig said the last time foreign investments were negative was in 2016, “but back then it was because China saw a ‘boom in outflows’ with big outbound M&A, which has since been shut down. The inflows have never been this weak.”

Emphasis added.

Kochkodin blamed much of the trend on Xi Jinping’s zero-Covid policy and geopolitical tensions. But the pandemic also caused companies to rethink over-dependence in their supply chains and to prioritize “resilience” along with “efficiency.” "That could mean that companies are less worried now about making money in China and more focused on making sure they can get their money out before it’s too late," he said.

Sovereign funds are also lowering their exposure to China, although one such withdrawal resulted from ethical concerns over Beijing’s support of the Myanmar junta. Last month, Norges Bank Investment Management (Norway GPFG), the world's largest sovereign wealth fund, divested from a Chinese state-owned company "due to the 'unacceptable risk' of "selling light combat aircraft and a weapons system to military-ruled Myanmar,” Aljazeera reported.

Aljazeera:

“Both before and after the coup in 2021, the armed forces have perpetrated extremely serious abuses against the civilian population, with, among other things, combat aircrafts, according to several international institutions,” the fund said of the reason for divesting from AviChina.

“The Council has attached importance to the fact that the company delivered aircrafts to Myanmar despite the military coup and the information concerning the military’s abuses. The company has not responded to the Council’s queries,” the fund added.

But long-time China investor GIC, Singapore’s sovereign fund is reducing its "investments following Beijing's tech crackdown and property market turmoil," according to Financial Times, “The fund was ‘burnt bad’ by the crackdown on Ant and has become wary of other unexpected moves from Beijing that could hit its investments or its ability to exit them,” FT news staff said citing sources familiar with GIC’s decision-making.

FT:

“They have dramatically decreased investments,” said one executive who had sought to tap GIC for funds to invest partly in China, adding that the “pivot” came at a time when it was difficult for funds to find other places to invest on the same scale.

ITjuzi, a data provider that monitors investments in China, recorded just two direct investments in Chinese companies by GIC last year, down from 16 in 2021.

For the rest of Kochkodin’s report in Forbes, Add This To The Turmoil Around China: Foreign Investment Has Gone Negative For The First Time Since 2016, click here. For Aljazeera’s report, China, India firms dropped by Norway fund over Myanmar weapons, click here. For FT’s update, Singapore’s GIC rethinks China strategy after significant pullback, click here.

Law and International Xi

US says Beijing may give weapons to Russia for Ukraine war effort

The Guardian reported on Sunday that "the US had information China was considering whether to give Russia assistance" that could include "guns and weapons" for the war in Ukraine.

US Secretary of State Antony Blinken and China’s top diplomat Wang Yi met to discuss the issue on the sidelines of the Munich Security Conference in Germany as the two sides also searched for a way to keep US-China relations from plummeting further after the spy balloon incident. According to a State Department readout, Blinken “directly spoke to the unacceptable violation of U.S. sovereignty and international law by the PRC high-altitude surveillance balloon in U.S. territorial airspace” and “warned about the implications and consequences if China provides material support to Russia or assistance with systemic sanctions evasion.”

USDOS, Feb. 18th:

The Secretary reiterated President Biden’s statements that the United States will compete and will unapologetically stand up for our values and interests, but that we do not want conflict with the PRC and are not looking for a new Cold War.  The Secretary underscored the importance of maintaining diplomatic dialogue and open lines of communication at all times.

Blinken promised to present “evidence” of Beijing’s intentions “soon,” but said the US “believes China may already be providing some surveillance information to the Wagner group, the mercenary wing that works alongside the Russian army,” Guardian news staff noted.

For the rest of the Guardian’s report, China may be on brink of supplying arms to Russia, says Blinken, click here.

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