China's open-door investment policy, the hallmark of the country's remarkable economic transformation, is being squeezed by a protectionist push that may make it tougher for foreigners to do business, analysts said.
Over the past few months China's ruling Communist Party has made it clear that after nearly 30 years of unparalleled growth, it wants to overhaul its economic model to better protect the nation's interests.
Overseas investors have been caught on the back foot as Beijing has in a wide range of industries recently set up new barriers to entry that have renewed uncertainty about risks involved in doing business in China.
Among the provisional rules that affect foreign investors are restrictions on mergers and acquisitions in several industries, a tightening of media distribution rights and limits on real estate purchases.
The action has come amid fierce debate in Beijing over the future thrust of China's economic reform, in which some officials fear that despite the nation's spectacular economic success its own firms are losing out to multinationals.
It has also come as Chinese President Hu Jintao (
At the close-door meeting of the Central Committee, Hu and Wen and nearly 500 members of the party elite will discuss the country's massive wealth gap and other issues that are inextricably tied to the economic agenda.
"The Hu-Wen administration has tried to adjust the economic development strategy," said Li Cheng, a China scholar at the Brookings Institute in Washington.
"It is seeking more domestic demand, less foreign trade, more social justice, less economic growth, more inland development, less favorable policies for its coastal regions," Li said.
China has justified the measures by citing the need to restructure its booming economy but also to lend a hand to domestic industries that are being outclassed by foreign competition.
Officials blame foreign corporations for unfair competition practices and because they command dominant positions through mergers, brand management and abundant capital, more must be done to protect local players.
The conservative view point is not new but is gaining ground, Li said.
"The new left view has been around in China for over a decade, but it has gained more momentum, and to a certain extent, this view is shared by Hu and Wen and many leading public intellectuals," Li said.
The apparent shift also underscores the tenuous legal environment for foreign investors in China even though the country is still opening up its industries as mandated by its membership in the WTO.
"As long as China doesn't have real rule of law, foreign -- as well as Chinese -- business people there will have to rely on the good will of the powerful to protect their interests," said Andrew Nathan, a China expert at Columbia University in New York.
While Chinese leaders insist that there is no reversal to the country's two-decade-old "reform and opening up policy" and that it remains committed to free and open trade, the policy rethink has sparked concerns.
"Regulations have always moved in one direction up until now and they have always been towards liberalization," said Standard Chartered's Stephen Green, a China economist familiar with the regulatory environment.
"China has yet to finish its industrialization process; it still needs the contribution from the foreign capital, so it's a bit worrisome that the government has issued these tightening policies," Green said.
However, Chen Xindong, an economist at BNP Paribas, argued it is only natural, after so many years of accelerated economic growth, for Beijing to become more selective about foreign investment and foreign firms would easily adapt.
"China used to be isolated and then it opened up wildly ... at that time, China didn't know what should be controlled and what shouldn't," Chen said. "So now it's time for China to reconsider [its policies] and rearrange things."
"It's like you used to play basketball on a playground with no out of bounds lines. Then suddenly lines are drawn and you have to play inside the court, but it doesn't mean you can't play basketball," Chen said.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)
EYE ON STRAIT: The US spending bill ‘doubles security cooperation funding for Taiwan,’ while also seeking to counter the influence of China US President Joe Biden on Saturday signed into law a US$1.2 trillion spending package that includes US$300 million in foreign military financing to Taiwan, as well as funding for Taipei-Washington cooperative projects. The US Congress early on Saturday overwhelmingly passed the Further Consolidated Appropriations Act 2024 to avoid a partial shutdown and fund the government through September for a fiscal year that began six months ago. Under the package, the Defense Appropriations Act would provide a US$27 billion increase from the previous fiscal year to fund “critical national defense efforts, including countering the PRC [People’s Republic of China],” according to a summary