Dr. Jean-Marc F. Blanchard's blog

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Circling around China’s Dual Circulation Policy, part III-Implications for China’s Outward FDI

This piece complements two earlier pieces that, respectively, overviewed China’s Dual Circulation System (DSC) and pondered its implications for inward foreign direct investment (FDI) into China. It specifically focuses on the potential ramifications of the DCS for Chinese outward FDI (OFDI). Prima facie one logically might expect the DCS to moderate Chinese OFDI since its goals include inter alia enhancing China’s indigenous capabilities, insulating China from an occasionally hostile external environment, and increasing domestic consumption and production. In actuality, though, these and other DCS aims do not support the premise the DCS will result in Chinese money shunning the outside world.

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Circling around China’s Dual Circulation Policy, part II-Implications for Inward FDI

In my December blog, I overviewed China’s Dual Circulation System (DCS). To reiterate, foreign multinational corporations (MNCs) are concerned about the DCS’s emphasis on self-sufficiency, indigenous technology, and insulating China against the international market’s vagaries. Foreign MNCs, though, also see opportunities to satiate anticipated growth in domestic demand and the needs of a presumptively wealthier population, facilitate China’s efforts to promote high-quality development through inter alia the provision of “technology-focused products and services” (as one Michelin China CEO put it), and to supply the materials needed for China’s ramped up domestic infrastructure and production.

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Circling around China’s Dual Circulation Policy, part I-Ins and Outs

In May 2020, China’s two-track “dual circulation” strategy (DSC) came to light. An internal circulation track—the “mainstay”—encompasses domestic consumption and production. An external circulation track entails more opportunities for foreign direct investment (FDI) and efforts to expand China’s external connections.

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Small Waves Precede Tidal Waves: American Sanctions on Chinese Companies involved in South China Sea Island Building and their Larger Ramifications

The United States (US) Department of Commerce recently blacklisted two dozen Chinese firms which it said, “played a ‘role in helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea.’” Companies listed included Guangzhou Haige Communications Group, China Shipbuilding Group, and China Communications Construction Co. (CCCC). The US State Department later accused CCCC and its subsidiaries of “‘corruption, predatory financing, environmental destruction and other abuses.’”

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Dashing for the Door Due to Dealing in Data or Singapore Sling

The recent passage of the National Security Law for Hong Kong has raised all kinds of quandaries for high-technology and other companies, especially those that deal in data. This is so because the new law makes it easier for government authorities to access data, restrict the kinds of content that are published, and control the transmission of data. In the event of noncompliance with (vague and likely fluid) regulations, firms risk significant fines, imprisonment, or other sanctions. There has been a mild reaction by big firms such as Apple, Facebook, and Google, but they are not located in Hong Kong per se and their longer-term plans are unclear. Businesses actually located in Hong Kong face a serious quandary.

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Dancing while Watching the Clock: Tik Tok’s Woes in India

ByteDance is facing up to USD $6 billion in losses from the Indian government’s decision to ban almost five dozen Chinese mobile phone apps including its Tik Tok and Helo.

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Run Bank Run? The Deposits Foreign Financial Firms Made in China Market (Still) are Not Liabilities

How fast sentiments can change! The much vaunted opening of China’s financial sector to foreign banking, insurance, and securities firms has become a source of angst with observers now wondering if foreign financial players such as Allianz, Citigroup, JPMorgan, Nomura, and UBS will get caught up, directly or indirectly, in China-United States (US) tensions relating to geopolitics, trade, foreign direct investment (FDI), portfolio investment, Covid-19, and the changed status of Hong Kong. Potentially at risk are billions of dollars in FDI such companies have spent to acquire majority stakes in or establish securities joint ventures (JVs), build up their China insurance operations, and begin mutual fund operations.

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Casting after Covid-19 or Premature Predictions about COFDI’s Demise

Last month, I wrote pessimistically about the prospects for foreign direct investment (FDI) in China in the post-coronavirus world. Contrastingly, I am not so pessimistic about the future of Chinese outward FDI (OFDI), though China’s economic situation, the challenged cash flows and balance sheets of Chinese investors (state-owned and private), and China’s ever present worries about capital flight will constrain OFDI amounts. This seemingly pollyannaish view derives from home (China) and host (recipient) country factors shaping Chinese OFDI (COFDI).

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The New Online World Could Mean Offline for FDI in China: Political and Economic Factors Affecting Future FDI in China’s Online World

The coronavirus, otherwise known as Covid-19, has hit foreign direct investment (FDI) flows into China hard. This should surprise no one—money is scarce; the payback from FDI now seems far away; and resources are being husbanded on the home front.

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De virus, Decoupling, De-globalization, Downsizing, and FDI in China

China’s coronavirus epidemic has had profound economic effects including dramatically reducing travel within and outside China, severely suppressing business activity in the education, entertainment, food & beverage, and leisure and recreation industries, among others, and disrupting or freezing manufacturing and the delivery of production i

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