China Softened Its Stance On Foreign Investment In The Country

China Softened Its Stance On Foreign Investment In The Country
Paul Allison, CFA

about 2 months ago2 mins

Mentioned in story

What’s going on here?

China softened its stance on relationships, announcing plans to make it easier for foreign businesses to invest in the country.

What does this mean?

If there was a Tinder for global economic superpowers, presumably stuffed full of stacked egos and mind games, China and the US would hardly be sending each other super-likes. While the pair could form the most iconic power-couple the world has ever seen (maybe with the sole exception of Posh and Becks), their relationship has been spattered with dealbreakers like trade limits and stances on national defense. But maybe they’re starting to focus on what they do have in common, instead. After the US and Chinese presidents met in November, the Chinese government seems to be following through on promises to make the country more accessible for foreign businesses. That could be the start of something beautiful: a buoy for international companies with a foot in China, and some more cash flowing around the country’s currently loveless economy.

China foreign investment

Why should I care?

For markets: Expensive taste.

China’s shoppers usually love a bit of luxury, with the country making up a major market for established European and US companies like Estée Lauder and LVMH. But now that everyday workers need to watch their coins a little closer, those companies have seen the repercussions in their sales and share prices. So if China’s initiatives manage to make shoppers’ cash stretch further, companies will be toasting glasses all over the globe.

Luxury stocks fall

The bigger picture: This could be a year of exploration.

The US tech sector pulled in more than its fair share of investors’ cash last year. So with stateside stock markets still wrangling rallies, fewer investors braved the uncertainty of emerging markets. That does mean, though, that their stocks are now a lot cheaper than their US counterparts. And if China, the biggest emerging market of them all, can recover this year, investors might take the chance to explore the world for less.

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