China opposes protectionism and wants to bolster supply chains with all countries, Chinese Premier Li Qiang (李強) said yesterday, as nations voice concern at how much their supply chains depend on the world’s second-largest economy.
Li’s comments come amid calls over the past year from the US and the EU to reduce their dependence on China in some sectors and “derisk” their supply chains, as well as efforts to cut off Chinese enterprises from some advanced semiconductors.
“We are willing to build closer production and industrial supply chain partnerships with all countries,” Li told the first China International Supply Chain Expo, adding that the international community needs to be “more wary of the challenges and risks brought about by protectionism and uncontrolled globalization.”
Photo: Reuters
Recent geopolitical tensions, from Russia’s war in Ukraine to concerns over a possible Chinese invasion of Taiwan, have led a growing number of foreign businesses to opt against expanding their supply chains in China, instead directing investment to countries including India, Mexico and Vietnam that enjoy better ties with the US.
The expo, organized by the China Council for the Promotion of International Trade, is Beijing’s latest bid to increase foreign investment in China, which has dropped to historic lows.
The value of announced US and European greenfield investment into China dropped to less than US$20 billion last year, from a peak of US$120 billion in 2018, according to Rhodium Group consultancy, while investment into India rose by about US$65 billion, or 400 percent, from 2021 to last year.
Despite the decrease, China remains an attractive option. A survey conducted by HSBC Holdings PLC at the China International Import Expo earlier this month showed 45 percent of firms expect to expand their supply chain in China over the next year.
An apparent improvement in US-Sino ties, after Chinese President Xi Jinping (習近平) this month met US President Joe Biden and participated in the APEC Summit, should also help reinforce China’s position as a key manufacturing hub.
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