China Herald: China is looking for a different kind of investor

Shaun Rein

Services are replacing manufacturers as preferred investors in China, tells business analyst Shaun Rein in VOA as Shanghai is opening its free trade zone. That could be a trial balloon for the next five to ten years, before moving on, he expects.

VOA:

“China’s government now is switching more towards domestic consumption and services,” said Rein. “In order to really boost up consumption and services, the government has to attract a different type of foreign investor and has to boost domestic spending in a different way.”

Rein said the opening of the new zone is hoped to attract more foreign investment, banking services, insurance and more creative technologies. Right now, said Rein, Shanghai’s economy relies too much on heavy investment, particularly real estate.

“The idea is that if you have a more market oriented financial system in this free trade zone, that’s going to create a much healthier financial system throughout the entire country,” Rein said.

News of the plans has other regions in China lining up to receive the same treatment. When the government approved the plan for Shanghai in August, Tianjin Zhoushan and cities in Guangdong also started seeking free trade zones of their own.

Hong Kong is also watching developments cautiously, and earlier this month Li Ka-shing said the port city needs to raise its competitiveness if it doesn’t want to loose out to Shanghai. Li is one of Asia’s richest men and chairman of the Hong Kong-based companies Cheung Kong Holdings and Hutchison Whampoa Limited.

“Every city in China basically wants to have a free trade zone like this because they know it’s going to boost investment, employment and GDP growth, but the government here tends to be very cautious,” said Rein. “They like to put up a trial balloon like a free trade zone or duty free and let that run for five or 10 years.”

More in VOA Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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