CHINA IN DAVOS
In the first-ever speech by a Chinese president in Davos, Xi Jinping offered a strong defense of globalization and China’s help in securing growth and protecting the global economic order. “We must remain committed to developing global free trade and investment, (…) and say no to protectionism,” Xi said.
His keynote address at this year’s World Economic Forum (WEF) also contained a warning to the incoming U.S. president Donald Trump: “No one will emerge as a winner in a trade war,” said Xi. He also warned the U.S. from pulling out of the Paris Agreement on climate change, reminding all signatories of their “responsibility for future generations.”
Just hours before Xi’s speech, China’s State Council released a list of guidelines to increase market access for foreign investors in China’s manufacturing and energy sectors. It also urged local authorities not to discriminate against foreign companies.
The move is a reaction to complaints in the international business community about a lack of reciprocity as China exports products and invests abroad, while limiting foreign access to its own markets and distorts competition by state intervention.
Chinese companies may be able to sell their shares in Germany as early as this year. The Shanghai Stock Exchange (SSE) announced the plan to issue the so-called “D shares” on January 8. They would be listed and traded at the Frankfurt-based China Europe International Exchange AG (CEINEX), which was set up jointly by the SSE, Deutsche Börse AG and China Financial Futures Exchange in 2015. The plan still needs to be approved by German and Chinese regulators.
It remains to be seen how German investors react to shares of companies registered in China. Investors may view Chinese shares as a riskier investment, especially after the Chinese stock market crash in 2015. On the other hand, a number of leading Chinese companies had successful IPOs in the U.S., showing that the acquisition of shares of Chinese “blue chip” companies can be seen as an opportunity for private investors to benefit from China’s economic growth.