[The Epoch Times, May 10, 2022](The Epoch Times reporter Liang Yao interviewed and reported) The CCP’s coercive policy of zero removal, extensive control and crackdown on private enterprises, and the US sanctions policy have severely hit the US’sInvest in China.
The CCP’s mandatory epidemic prevention policy weakens the investment confidence of American businessmen
A few days ago, the CCP’s strict zero-clearing policy in more than 20 cities including Shanghai has damaged foreign companies.Invest in ChinaThe lockdown has not only hit operations and supply chains, it has also cut U.S. companies’ investment in China and lowered those companies’ revenue expectations.
A number of international investment banks recently downgraded China’s economic growth (GDP) estimates for this year, and the April Purchasing Managers’ Index (PMI) surveyed by China media Caixin also fell to a two-year low.
According to Bloomberg, the American Chamber of Commerce in China(AmCham)’s survey from April 29 to May 5 found that more than half of the chamber’s 121 companies reduced (26%) or delayed (26%) their investment in China, and 44% could not predict or decide. %, and only 1% increased investment, with nearly 60% of companies downgrading their revenue forecasts for this year after the recent outbreak.
AmCham Chairman Colm Rafferty said in a statement that current measures to contain the virus have undermined U.S. business confidence in China. The already challenging situation continues to deteriorate.
He added that the company “doesn’t see any light at the end of the tunnel”.
Since March, new strains of Omicron have emerged across China, and the CCP has takenForce clearChina’s lockdown measures have resulted in a sharp contraction in Chinese economic activity and a slowdown in export growth .
According to the survey conducted from April 29 to May 5, more than 15% of U.S. companies with operations in Shanghai reported that their operations in Shanghai remained completely closed.
Nearly 60 percent of respondents with operations across China reported slowing or reduced production capacity due to a lack of staff, difficulty obtaining supplies or government-ordered lockdowns. While nearly a quarter of companies surveyed said recent policy measures to improve logistics in China have had a positive impact on their operations, another 41% said damage from supply chain disruptions persists.
Half of U.S. companies in China see supply chains as one of the biggest threats, and more than 70 percent expect their revenue or profits to take a hit if the current lockdown continues into next year. The survey showed that more than half of the respondents expected to reduce the amount of investment and expatriate staff in this situation.
More than a quarter of companies have lost more than 30% of their foreign employees in China due to China’s epidemic restrictions and quarantine policies, the survey showed. Nearly 40 percent of respondents said they were dissatisfied with China’s (CCP) outbreak management. Their biggest complaints, the survey showed, were long quarantine periods, restrictions on travel to the country and a lack of flights.
Tenured Professor, Aiken School of Business, University of South CarolinaXie TianHe told The Epoch Times: In the past, many factors, such as the CCP’s hostility to the United States, the trade war, the loss of labor costs, and the deterioration of the business environment, will reduce foreign investment. But even if the economy collapses, the CCP will not easily give up the policy of zeroing out. For them, maintaining power is the most important thing. In the end, it is likely to return to the “centralized purchase and sales” model of the planned economy in the Mao Zedong era.
China’s Extensive Control of Private Companies and Crackdown Cuts U.S. Funds’ Investment in China
China’s investment landscape is in turmoil, with growing political and market risks of investing in China following the CCP’s broad crackdown on the private sector and tightening controls, and some top U.S. investors, including U.S. pension funds and endowments, are gradually avoiding Open investments in Chinese companies and pursue new goals. These top investors control tech giants such as Tencent Holdings Ltd and Alibaba Group Holding Ltd.
In recent years, the CCP has taken various measures to strengthen its administrative control over private and private enterprises. The State-owned Assets Supervision and Administration Commission of the Communist Party of China has also introduced new policies to form new giant central enterprise groups through paid acquisitions and joint-stock cooperation in industries such as steel and power transmission and distribution equipment manufacturing. On April 10, 2021, the State Administration for Market Regulation ordered Alibaba Group to stop its illegal activities and imposed a fine of 18.228 billion yuan. On December 24, 2021, the State Administration for Market Regulation of the Communist Party of China announced that it would initiate an investigation into Alibaba Group Holding Co., Ltd.’s implementation of ‘choose one from two’ and other suspected monopolistic behaviors.
Professor Xie Tian believes that the CCP believes that large high-tech companies must be strictly controlled, and the top leaders of the CCP do not trust such entrepreneurs as Jack Ma and Ma Huateng. In the early days, the CCP gave it space to grow under the protection and monopoly of the CCP, and foreign capital was not allowed to compete with it; in turn, these companies were also cooperating with the CCP. After a certain period of time, the CCP began to cut leeks on them—establishing party branches in enterprises; some were directly sent by the CCP to the company’s leadership, and some were on the company’s board of directors.
Taking Ant Financial’s Alipay as an example, Professor Xie said: “It touches the core financial interests of the CCP, so the CCP wants to replace the founders of these companies.”
Ant Technology Group’s listing plan was halted by Chinese regulators on November 3, 2020. The notice issued by the Shanghai Stock Exchange to Ant Technology Group stated that the company’s executives were jointly held for regulatory interviews by relevant departments, and changes in Ant Financial’s financial technology regulatory environment “may cause your company to fail to meet the issuance and listing conditions or information disclosure requirements.” The Shanghai Stock Exchange decided Suspend the listing plan of Ant Technology Group.
According to Bloomberg, Harvard’s endowment is considering reducing its investment in China. Pennsylvania employees’ pension funds have committed no new cash to Chinese private equity funds in the past 12 months, while Florida’s pension system has halted new investments in China as it assesses risk.
Dollar-denominated funds investing in China raised $1.4 billion in the first quarter, the lowest level for the same period since 2018, and the third straight quarter of declines, according to research firm Preqin.
According to The Epoch Times, in December last year,FloridaGov. Ron DeSantis has decided to take action to stop the flow of funds from Florida residents to Chinese companies. Florida also removed proxy voting rights that the state pension fund had granted to outside fund managers such as BlackRock. DeSantis accused the private equity firms of pursuing an ideology that was inconsistent with the state’s values and economic interests.
In a letter to 10 governors, including DeSantis, William Hild, executive director of Consumers’ Research, wrote: “We urge elected officials to do their due diligence in educating their institutions. and employees, to make them aware of the multiple risks associated with BlackRock’s large-scale investments in Chinese companies, both from an ethical standpoint and from the fiduciary responsibilities of U.S. pension holders and retirees.”
According to consumer research reports (pdf), Washington tops the list with $13 billion of state pension funds invested in BlackRock, followed by Florida ($10.7 billion) and New York ($9.8 billion).
BlackRock and several large U.S. asset management funds have come under fire for investing in Chinese companies. These Chinese companies directly or indirectly support the Chinese military and security apparatus and help Beijing violate human rights.
“BlackRock’s investment choices jeopardize not only the security of U.S. pensions, but the security of our entire nation,” the report said.
According to the report, BlackRock has invested heavily in some companies that support the technological construction of the Chinese military, including Tencent, SMIC, China Telecom and China Aerospace Satellite.
U.S. sanctions on China or escalation raises investment risk
Professor Xie Tian believes that U.S. tariffs and sanctions will also affect U.S. investors in China. The United States has imposed sanctions on the Chinese Communist Party and delisted some Chinese companies from the New York market, increasing the risk of U.S. investment in China.
According to the BBC, the U.S. Senate Foreign Affairs Committee will consider the Assessing Xi’s Interference and Subversion Act (AXIS Act, also known as the “Axis Act”) on May 4. The U.S. House of Representatives passed the law at the end of April, and it will come into effect after the Senate passes it and is signed by U.S. President Joe Biden.
The “Axis Act” requires the U.S. State Department to submit reports to Congress within 30 days after the law takes effect and every 90 days in the future, explaining the progress of cooperation between China and Russia and whether the CCP has assisted Russia in evading international sanctions.
The Biden administration has repeatedly stated that if Beijing provides substantial support to Russia, it will simultaneously implement it against China (CCP).secondary sanctions.
The British “Financial Times” reported last Wednesday (May 4) that the United States is starting to crack down on Chinese video surveillance equipment manufacturers.Hikvision(Hikvision) to impose human rights-related Treasury sanctions (secondary sanctions). Experts said the sanctions could affect Hikvision’s customer orders in more than 180 countries, meaning the U.S. has stepped up its imposition of such sanctions on Chinese companies.
Professor Xie Tian said: “U.S. investment is now gradually shifting to Southeast Asian countries such as Vietnam.”
Responsible editor: Lin Yan#
