China has formally announced plans for two internationally-oriented economic/trade events in Qingdao, a sprawling port city and a coastal hub in the country’s Belt and Road Initiative (BRI). The Shandong provincial government, in partnership with the Chinese Ministry of Commerce, will host the “2019 New Growth Drivers – Qingdao Fair” and “Qingdao Multinationals Summit” from October 19-21, 2019. This is the most recent in a series of Chinese events and policies aimed at promoting business confidence in the country amidst global trade disruption and prevailing “anecdotes of mistreatment” from foreign investors.
Similar to the highly-publicized China International Import Expo and long-running Canton Fair, the Qingdao Fair will feature an exhibition space for both domestic and international firms to showcase goods and set business relationships in motion – all the while promoting Shandong as a premium market for foreign business investment. The Qingdao Multinational Summit, running concurrently, will convene corporate executives and industry leaders from multinational corporations with “the goal of identifying better methodologies to promote the formation of new models to further open up to the world.” As of mid-August, provincial authorities had confirmed the attendance of 188 corporate leaders from 26 countries, including executives from 28 American firms, including HP, Honeywell, Dow Chemical, and Oracle.
There is an air of uncertainty surrounding the foreign business and investment environment in China, especially directed from the West. The ongoing U.S.-China trade dispute has served as an underlying foundation for concerns. Global manufacturers, for example, have been spurred on by rising tariff costs and supply-chain disruption to move operations out of China. The Hong Kong protests have magnified the complex relationship between big companies and the Chinese state, which expects firms to distance themselves from politics and denounce government dissenters. And, despite a recent overhaul of the law regulating foreign investment in China, there are still prevailing issues such as intellectual property theft and forced technology transfers.
Events such as the Qingdao Fair are believed to be beneficial in facilitating mutual cooperation and understanding amongst Chinese and international firms. While this event could be discounted as a mere publicity stunt, continued dialogue and strengthened business-to-business ties are never a bad thing.
On balance, China will continue to serve as an attractive market for American trade and foreign investment throughout the foreseeable future. China’s Ministry of Commerce reports a 7.3% rise in overall 2019 FDI compared to a year earlier. Despite high-level tensions, American foreign direct investment (FDI) into China has also risen in 2019, according to the Rhodium Group. And while 81% of American companies surveyed by the US-China Business Council (USCBC) reported that trade tensions had “affected their business operations”, 97% reported profit increases in 2019. The USCBC states that “while no mass exodus from China is expected”, various economic realities are “creating an increasingly uncertain commercial environment.” Big picture, it’s not entirely doom and gloom – even for American firms operating in the country. A similar reality may be imagined for other Western companies.