Once again we have seen the two-faced attitude of China to vetting foreign investment.
On Sunday China said it “resolutely opposes” the addition of 23 Chinese entities to a US economic blacklist over issues including alleged human rights abuses and military ties.
The country’s Ministry of Commerce said in a statement the inclusion of the Chinese entities was a “serious breach of international economic and trade rules” and an “unreasonable suppression” of Chinese companies.
Beijing threatened that it would “take necessary measures to safeguard China’s legitimate rights and interests,” according to a spokesperson.
The negative reaction followed news on Friday that the US Commerce Department revealed it had added 14 companies and other entities to its economic blacklist, saying they had been “implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass detention, and high technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang Uyghur Autonomous Region.”
China continues to deny the claimed abuses.
Markets took the US move and China’s threat to retaliate in its stride with markets seeing a strong relief bounce after Friday’s record closes on Wall Street.
Groups on the US blacklist are generally required to apply for licenses from the Commerce Department and face tough scrutiny when they seek permission to receive items from American suppliers.
The US added five extra groups that it claims directly support China’s military modernisation programmes related to lasers and battle management systems. It identified a further four entities for “exporting and attempting to export items” to entities already sanctioned by the US.
In 2019, the Commerce Department under then-president Donald Trump targeted 20 Chinese public security bureaus and eight companies including a video surveillance firm as well as leaders in facial recognition technology over China’s treatment of Muslim minorities.
But in Beijing, Friday also saw the Ministry of Commerce issue a veiled warning that it would lift its scrutiny of foreign investment in the country on the basis of one of the most favoured phrases in the official Chinese lexicon, ’national security.’
China’s Ministry of Commerce buried the plan in the middle of the official publication of its priorities for the next five years.
These priorities are part of the country’s new five-year plan and started in January. It took seven months to publish them.
The ministry’s priorities included reference to the “Measures for Security Review of Foreign Investment”. Analysts say these measures usually need pre-review of foreign investment plans related to the military and important agriculture, energy and technology products.
Analysts say the review system was buried on page 43 of a 46-page document and while reviews of these proposals have been in place for a while the reference suggests that foreign investment faces greater scrutiny in the next five years, especially where it might involve proposals coming from countries such as the US (or Australia for that matter).
The CNBC business network reported that a translation of the Ministry’s priorities statement (a sort of Mission Statement) discussed preventing risks form foreign investment.
“(T)he commerce ministry said it would “improve the national security review system for foreign investment, and open security investigations into foreign investment that affects or could affect national security.”
That is similar to what Australia has been doing with Chinese investment and the US is doing as well.
“The Ministry of Commerce plan noted the need to respond to the impact of trade tensions with the U.S., while increasing collaboration with U.S. states and local governments,” CNBC reported the statement as saying as well.
