Industry News: China Withdrawing Support For Foreign Investments Next Year

[William Maley]

William Maley

Editor/Reporter - CheersandGears.com

December 29, 2011

2012 is bring forth some significant changes for automakers that were planning to invest in China. The National Development and Reform Commission (NRDC) and the Ministry of Commerce announced that January 30, 2012, the country will stop encouraging foreign investment in the auto industry. The NRDC states the decision was made to help nurture their domestic brands.

Jenny Gu, a senior market analyst at LMC Automotive in Shanghai tells Bloomberg the decision will end seven years of foreign-investor benefits including reduced tariffs on imported plant equipment.

Recently, China has slapped new duties on U.S.-made cars that are imported into the country.

“It might be more difficult for carmakers to get approval for new plants in the future unless they have an investment in new-energy vehicles,” Gu said.

China isn't cutting all foreign investments. In NRDC's press statement, it says the government will "open more sectors to foreign investors and encourage investment into energy-saving and environmentally-friendly technologies, new-generation information technology, biotechnology, high-end equipment manufacturing, alternative energy, advanced materials, and alternative-fuel cars."

Source: Bloomberg

View full article

[67impss]

Yeah you can play in our park if you develop new tech here while you are tethered to our companies while sharing info.

[FAPTurbo]

China isn't cutting all foreign investments. In NRDC's press statement, it says the government will "open more sectors to foreign investors and encourage investment into energy-saving and environmentally-friendly technologies, new-generation information technology, biotechnology, high-end equipment manufacturing, alternative energy, advanced materials, and alternative-fuel cars."

Yeah so they can then close those industries to investment fifteen years down the line after they've matched the rest of the world, too!

Oh, but if we were to do that in North America that's PROTEKSHUNIZM and SOSHULIZUM.

[ocnblu]

Those people are not nice. What would happen if GM and other US automakers were to flat pull out of China tomorrow? Would they survive selling their vehicles everywhere else in the world except China?

Edited December 30, 2011 by ocnblu

[Drew Dowdell]

a reciprocal trade response is needed.

[67impss]

Tough to blackmail your own banker err Master?

[Drew Dowdell]

Tough to blackmail your own banker err Master?

Not at all.

If you owe the bank $1,000, that's your problem.

If you owe the bank $1.1483 trillion*.... that's the bank's problem.

*as of November 2011.

[67impss]

IDK I think the bank would try to repossess at some point

[Drew Dowdell]

They're in a catch-22 now. Their economy depends on ours. Their financial health depends on ours.

[67impss]

[pow]

A Geely Emgrand EC7 ain't gonna cut it for the Chinese 1%. It's not democracy, human rights, or freedom of speech that will have the "new" China revolting against their government--no, the rebellion will happen when you take away their iPads, Coach bags, and BMWs.

Edited December 30, 2011 by pow

[Blake Noble]

They're in a catch-22 now. Their economy depends on ours. Their financial health depends on ours.

The ties aren't quite so dire. The Chinese goverment realizes it's in a precarious position since we became it's number one debtor and the value of our dollar keeps diving lower and lower.

Since the Chinese know our money could be a potentially bad asset and more of it is sure to head their way, they look for things to spend it on as soon as it arrives on their doorstep. Automakers, oil fields, property ... anything that has a good chance (i.e hard assets, commodities) of being sold for profit should we wind up deferring on our debt.

[the_yellow_dart]

I don't see why we don't have tariffs... What's wrong with protectionism? ...and how is that socialist?

[Robert Hall]

I don't see why we don't have tariffs... What's wrong with protectionism? ...and how is that socialist?

It's against free trade, which upsets the free market fanboys...

[the_yellow_dart]

They picked a great name. 'Free market' sounds like 'free speech' and 'free choice', and that makes it harder to deride. (but I'm going to anyways)

I never really understood the need for free trade. Conditions in the economy of every country are different, and need to be controlled by each government accordingly. That's why I never understood why Europe adopted the Euro... you lose control of your economy and inflation rate, which is a lesson they seem to be learning the hard way right now.

Can anybody enlighten me as to why free trade or currency unions are a good thing? I'm only seeing negative points for both.

[SAmadei]

Those people are not nice. What would happen if GM and other US automakers were to flat pull out of China tomorrow? Would they survive selling their vehicles everywhere else in the world except China?

Flat pull out? I feel this is the first step towards China throwing GM (and other foreign companies) out. It don't affect China... they will go making Wulings and Buicks without GM. GM gets a kick in the nuts short term for investing so much in China and a stab in the back when China eventually starts dumping rebadged Wulings in the US for chump change. Unless China plays fair, I don't see how GM could exit China gracefully.

[loki]

I don't see why we don't have tariffs... What's wrong with protectionism? ...and how is that socialist?

it's not natural, tarrifs and such are a mercantist idea.... would it seem right if you had tariffs between you and anyone else? boarders are just imaginary things that only matter to goverments (unless they are your property's boarders)...but you don't have tarifs on goods in and out of your property, do you? tariffs are just used as a capital raising scheme for governments, but can also be used to wage economic war in trade.

we don't have tarifs between states... imagine how costly that would become if we did.

[G. David Felt]

They picked a great name. 'Free market' sounds like 'free speech' and 'free choice', and that makes it harder to deride. (but I'm going to anyways)

I never really understood the need for free trade. Conditions in the economy of every country are different, and need to be controlled by each government accordingly. That's why I never understood why Europe adopted the Euro... you lose control of your economy and inflation rate, which is a lesson they seem to be learning the hard way right now.

Can anybody enlighten me as to why free trade or currency unions are a good thing? I'm only seeing negative points for both.

The problem is not a single Currency or open free market, the problem is that each country is not following the agreement to control spending and this is where they have gotten into trouble.

One Currency and travel regulations is good for everyone as it makes it easier to buy and sell and travel. The politicians need to stick to the agreement on how much spending they can do. Sadly due to the overly large amount of Socialist retirement programs, the countries are getting themselves into trouble.

You cannot have people work till 50 and retire and expect the gov to pay you an equal income along with medical benefits till you die. This socialist thinking bankrupts countries. Greece is a perfect example.

If they can cut spending and get things changed enough and survive this rough period, the Euro Union and Ero Dollar will come out very strong.

Free trade is good for all as it allows the lower cost of goods from all over the world to come in and make life better for all. Cheap assembly of electronics from China, Cheap food from the US, etc. In a perfect world, every country should be able to reduce the cost of goods and increase the quality of life if they focused on doing what that country does best and sell around the world.

Not everyone can do everything really well. This is why Asian countries fear US product, we automate and produce in large quantities compared to the amount of manual labor certain Asian countries still use. Example is what the US produces in Rice in 1 acre compared to what China produces in 1 acre. We get a ten fold in production due to machines and automation of planting and better growth control compared to the manual labor way that China does it. Yet they protect their farmers by enforcing high tariffs on our rice which does not help to improve their own quality of life for their people. China could change that if they spent as much on military as they did to bring in tractors and automation equipment to modernize their farmers.