Xi Jinping Assures Additional "Law-based" Reforms to Foreign Leaders

Arun Goswami
28 Mar, 2024
Mumbai

Stocks in Shanghai and Hong Kong advanced following better-than-expected earnings from China Life, Haier Smart Home, and ICBC. 

Investors have shifted their attention to corporate earnings and economic data flow after the market intervention by government-controlled funds lifted broader indexes by more than 10% in February. 

President Xi Jinping met with a with a delegation of U.S. business leaders and pledged to create a more market-friendly business environment for foreign investors. 

The meeting between President Xi and the U.S. business leaders, including senior executives from Pfizer, FedEx, Blackstone, Qualcomm, and Bloomberg, was held at the end of the China Development Forum in Beijing on Wednesday. 

Xi proposed deepening economic reform that is "market-oriented" and "law-based" to create more room for foreign businesses and rejected the narrative that China's economic growth has peaked. 

However, Chinese policymakers have stepped up efforts to support state-controlled large enterprises at the expense of the private sector and curtail the activities of foreign businesses. 

Moreover, small and medium-sized foreign businesses have started leaving China in droves and shifting their business activities to neighboring Vietnam, Mexico, or other markets in India and ASEAN countries. 

The Chinese government's support of widespread intellectual property theft and recent stringent controls on profit repatriation have also accelerated the sharp decline in foreign direct investment in the last four years. 

Beijing policymakers are running out of conventional policy tools to revive economic growth after the protracted property market slump are negatively impacting steel, cement, construction and financial services industries. 

President Xi Jinping in a widely publicized comments in the government-controlled media urging the central bank to start purchasing treasury bonds, a dramatic policy shift not seen in nearly 25 years.  

Financial markets are closed on Friday and Monday for public holidays in Hong Kong, but markets will remain open for business in mainland China. 

The CSI 300 index increased 1.1% to 3,542.0, and the Hang Seng index added 1.6% to 16,660.76.