Foreign business groups cautious of Xi’s third term

25 Oct 2022

Overseas business groups in China highlighted their caution over President's Xi Jinping's newly revealed leadership team and his priorities, with some pressing for more state intervention in the market.

President of the American Chamber of Commerce in Shanghai, Eric Zheng said the chamber was "encouraged" by the commitment to reforms indicated in Xi’s speech at the Communist Party Congress over the weekend, Reuters reports.

"However, at a time when China's economy faces a challenging environment, we are concerned that the use of non-market tools such as government subsidies to support the state sector could be counterproductive," he stated.

Xi Jinping secured a third leadership term on Sunday and unveiled a new Politburo Standing Committee. This sparked a steep decline in mainland and Hong Kong stocks, as investors sold on worries economic growth would be hampered by ideological policies.

Moreover, a statement by the European Union Chamber of Commerce in China said it was adopting a "wait-and-see" stance to the impact of the Congress as key policy announcements would likely not be made until March next year at the “two sessions” annual meetings.

Despite the Chamber of Commerce taking an upbeat approach to Xi’s statements on environmental protection, it added it wanted more transparency as to how the country will stay dedicated to reform, and also ways it would “stay independent and self-reliant.”

"It is not clear how these two statements can be reconciled in practice," it said.

Furthermore, managing director of the British Chamber of Commerce in China, Steve Lynch, said the Chamber had seen “considerable shifts” in specific policies, and it would wait to see how they would be rolled out.

Foreign businesses in China have become more critical of certain policies, such as the tough Covid measures, which they say is deterring investment and impeding them from attracting overseas employees.