The News
China’s annual Boao Forum for Asia — often called “Asia’s Davos” — got underway Tuesday, with Beijing hoping to court international and domestic political and business leaders as policymakers work to reinvigorate its lackluster economy.
The forum comes as Beijing grapples with heightened tariffs on some of its biggest exports, alongside sluggish growth, low consumer spending, and deflationary pressures.
SIGNALS
China seeks to reassure businesses and investors
China’s authorities are “doing all they can to help stabilize expectations” amid escalating economic uncertainty and lingering anxiety over previous crackdowns on private businesses and foreign firms, a Eurasia Group analyst told Nikkei: Officials on Tuesday said they had released five employees a US business intelligence firm arrested in one such crackdown in 2023, while Beijing is also moving to ease market access for foreign companies. Still, previous efforts to lure back foreign investors have largely failed, Bloomberg noted, and foreign direct investment in China slumped to a 35-year low last year. “Foreign investors need signs of something bolder,” an Economist Intelligence Unit analyst said.
Beijing ‘dominates’ the world’s economic order, but may face its own ‘China shock’
The US adoption of tariffs and other protectionist measures “looks an awful lot like Beijing’s policies,” Michael B. G. Froman, president of the Council on Foreign Relations, wrote: “China’s state nationalism now dominates the international economic order,” he added, warning that it remains unclear whether the US can beat China at its own game. A potential weakness, the Financial Times wrote, is that “Beijing risks experiencing the same ‘China shock’ that it imposed on advanced manufacturing nations” in the early 2000s, as increasing wages and machine use drive “a painful shift away from low-cost, labour-intensive production”. Still, Rhodium Group analysts note that China has remained strikingly resilient as a top producer of inputs and finished goods for the world despite its challenges.