Chinese Government Ignites 'Buy China' Campaign

Chinese Vice Premier Hu Chunhua Announces Support Plans for Overseas Companies... High-Level Opening
Inflow of Foreign Capital Drives Chinese Stock Market Soaring
Yuan Enters 6-Yuan Range for First Time in 4 Months

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Hu Chunhua (胡春華), Vice Premier of the State Council of China (in charge of commerce and trade), announced that he will support overseas companies to revitalize the economy. The plan is to support Chinese companies struggling due to the impact of the novel coronavirus disease (COVID-19) while attracting foreign companies to drive economic growth. This signals China's intention to follow its own path despite concerns and sanctions from the Western camp, including the United States, over the implementation of the Hong Kong National Security Law.

According to the state-run People's Daily on the 10th, the Chinese government held a "National International Trade and Foreign Investment Stabilization Work" meeting in Beijing on the 9th.

At the meeting, Vice Premier Hu emphasized the importance of overseas companies and investment, assuming the prolonged impact of COVID-19.

Vice Premier Hu stated, "Foreign trade and foreign investment occupy an important position in China's economic development," and added, "We will prepare various support policies to assist overseas companies." He further emphasized, "We will encourage a high level of openness to create a business environment," and "Efforts must be made to ensure that policies are effectively implemented."

The Chinese government's foreign investment support policy can be interpreted in two main ways.

First, unlike the Western camp including the United States where COVID-19 is spreading, China is confident that it has controlled the virus. Chinese health authorities have announced that the number of confirmed COVID-19 cases remains in single digits. Beijing, where a cluster infection began last month, has also shown stability, recording zero confirmed cases for four consecutive days. This suggests that China believes it can easily attract investment from overseas companies struggling due to the COVID-19 outbreak. At the same time, it can be read as a message that China will not be swayed by concerns and sanctions from the Western camp regarding the Hong Kong National Security Law.

The movements in China's securities and foreign exchange markets also support this confidence of the Chinese authorities.

The Shanghai Composite Index started at 3,409.47 on the 10th (local time), down 1.19% from the previous trading day, but it has risen for eight consecutive trading days since the 30th of last month, reaching its highest level in two and a half years. The common explanation among Chinese securities firms is that the stock market is on an upward trend due to expectations of economic recovery following the stabilization of COVID-19.

As foreign capital flows into the stock market, the value of the yuan is also on the rise. The People's Bank of China, the central bank, set the yuan exchange rate against the dollar at 6.9943 yuan, down 0.20% from the previous day. This is the first time in four months since March 12 that the yuan's official exchange rate has fallen into the 6-yuan range, indicating an increase in the yuan's value.

On May 29, when China officially decided to push forward with the Hong Kong National Security Law amid heightened US-China tensions, the yuan exchange rate against the dollar rose to 7.1316 yuan, the highest in over 12 years.

However, it remains uncertain whether the Chinese government's plan to attract foreign investment will be successful. There are also forecasts that large-scale investment attraction may not be easy due to the possibility of intensified Chinese offensives by the Western camp, including the United States, in the future.