CGTN Europe interviewed Rory Green, Chief China Economist for TS Lombard
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00:00Rory Green is the Chief China Economist for Independent Investment Research Provider,
00:04TS Lombard. Good to see you, Rory. Welcome back to the program. So, will this plan to
00:10increase foreign investment in China work, do you think?
00:14I think it's a good start. And along with the improvement we're expecting to see in
00:20the macroeconomic environment, which is, of course, a massive factor for prospective investors
00:25in China, we are expecting an increase in the domestic demand side of GDP this year,
00:31which is really critical to pull in foreign investors. I think those two combined, and
00:36we will see a better environment for FDI into China over the next couple of years, certainly
00:42compared to the last few.
00:44So what challenges do you think investors might still face despite this plan being brought
00:50in?
00:51Yeah, as I mentioned, the growth factor has been a big challenge in the last couple of
00:58years, and the returns on cash as well. So big hurdle is growth relative to the pre-COVID
01:05economy, the domestic market has been relatively sluggish, it's been exports powering growth.
01:12And this year, we'll see improvement on that side with investment and consumption picking
01:16up, helping to pull in investment. So that will be critical. And the other factor when
01:21looking at FDI is what companies can do with the money they make in China. And when interest
01:27rates are high, the RMB strong, that money stays within the PRC. Over the last couple
01:33of years, the dollar has been exceptionally strong, and rates outside of China have been
01:38very high, certainly relative to the PRC, and that's pulled money out. And that's still
01:44the case with a bit of a hurdle on that front for China to overcome. But at least on the
01:49growth side, we're looking at a much better environment.
01:51Well, one new factor, if you like, US tariffs, of course, what role might they have to play
01:59in foreign investments in China?
02:02Not just for China, but for everyone. It's a huge source of uncertainty at the moment.
02:09And until there is clarity on how high the US tariffs may go, or whether a deal could
02:15occur with China, it is going to delay new export orientated investment into China, and
02:24many other economies as well. But of course, China, under real scrutiny, for investment
02:30that is targeted to make in China for the China market, tariffs shouldn't have much
02:36of an impact. But the export side is really where we're looking for some damage there.
02:42So the overall number's down, but we did see some countries increasing investment into
02:47China, the UK among them. Why was that?
02:52I think for the UK, we are highly compatible with China's current stage of development.
02:58We are excelling in service exports, finance, law, architecture, whereas China is predominantly
03:07a manufacturing powerhouse. So very compatible economies, relatively few areas of direct
03:14competition. So the avenues for UK investment into China remain pretty strong at this stage.
03:23Rory, good to talk to you. Thank you so much for coming on the programme. That's Rory Green,
03:28Chief China Economist for Independent Investment Research, provider TS Lombard.