Trump’s interest in Greenland is driven not just by its strategic Arctic location, but also by its vast rare earth and critical mineral resources, which have drawn China’s attention as a potential investor and processing partner, raising the stakes in a growing geopolitical contest.

Rare earths and Arctic security: How is China involved in Greenland’s Kvanefjeld project?

Foreign businesses are swiftly retracting their investments from China, signalling a paradigm shift in the global economic landscape. The unprecedented $11.8 billion deficit in foreign investment, a stark departure from the country's historical trends, is raising eyebrows and prompting a closer examination of the factors at play.

Factors at play

Several factors contribute to this investment exodus. A cocktail of China's slowing economy, low-interest rates, and an escalating geopolitical tussle with the U.S. are casting shadows of doubt over the country's economic potential. Businesses, facing uncertainties on multiple fronts, are erring on the side of caution, leading to a reassessment of their engagement with the world's second-largest economy.

Geopolitical risks, domestic policy uncertainties, and concerns about slower growth are driving foreign companies to explore alternative markets. Strict pandemic lockdowns under China's 'zero-Covid' policy have disrupted supply chains for multinational corporations, further fueling the decision to diversify investments. While established multinational firms remain in the Chinese market, new investments are under scrutiny, reflecting a shift in the global economic landscape.

Insights and Themes

Beyond the immediate data, deeper insights emerge. The tensions between China and the U.S. have led to fresh export restrictions, impacting the supply chain dynamics for major companies like Apple. Diversification becomes not just a strategy but a necessity, prompting businesses to rethink their dependence on a single market. The story transcends a mere economic shift; it is a reflection of the evolving dynamics in global trade relationships and the delicate dance between economic giants.

Moreover, interest rates play a crucial role in this narrative. While global counterparts raise rates to combat inflation, China, in an unconventional move, lowers interest rates to support its economy. This, coupled with a depreciating yuan, prompts businesses to redirect their excess cash and earnings overseas, seeking higher investment returns.

As the world anticipates a crucial meeting between Chinese leader Xi Jinping and U.S. President Joe Biden, businesses remain cautiously optimistic. The diplomatic engagement witnessed over the past months hints at a desire to stabilise the relationship between the two economic powerhouses. However, the intricate web of economic uncertainties and geopolitical dynamics continues to cast a shadow on foreign investment in China.

Bottomline

The story of foreign businesses withdrawing from China is not just a statistical blip but a reflection of the intricate dance between economic giants. As the world watches these developments unfold, the outcomes of crucial diplomatic engagements and the economic strategies employed by nations will undoubtedly shape the trajectory of global investments in the post-pandemic era.

WATCH WION LIVE HERE

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Foreign businesses are swiftly retracting their investments from China, signalling a paradigm shift in the global economic landscape. The unprecedented $11.8 billion deficit in foreign investment, a stark departure from the country's historical trends, is raising eyebrows and prompting a closer examination of the factors at play.

Foreign businesses are swiftly retracting their investments from China, signalling a paradigm shift in the global economic landscape. The unprecedented $11.8 billion deficit in foreign investment, a stark departure from the country's historical trends, is raising eyebrows and prompting a closer examination of the factors at play. Factors at play Several factors contribute to this investment exodus. A cocktail of China's slowing economy, low-interest rates, and an escalating geopolitical tussle with the U.S. are casting shadows of doubt over the country's economic potential. Businesses, facing uncertainties on multiple fronts, are erring on the side of caution, leading to a reassessment of their engagement with the world's second-largest economy. Geopolitical risks, domestic policy uncertainties, and concerns about slower growth are driving foreign companies to explore alternative markets. Strict pandemic lockdowns under China's 'zero-Covid' policy have disrupted supply chains for multinational corporations, further fueling the decision to diversify investments. While established multinational firms remain in the Chinese market, new investments are under scrutiny, reflecting a shift in the global economic landscape. Insights and Themes Beyond the immediate data, deeper insights emerge. The tensions between China and the U.S. have led to fresh export restrictions, impacting the supply chain dynamics for major companies like Apple. Diversification becomes not just a strategy but a necessity, prompting businesses to rethink their dependence on a single market. The story transcends a mere economic shift; it is a reflection of the evolving dynamics in global trade relationships and the delicate dance between economic giants. Moreover, interest rates play a crucial role in this narrative. While global counterparts raise rates to combat inflation, China, in an unconventional move, lowers interest rates to support its economy. This, coupled with a depreciating yuan, prompts businesses to redirect their excess cash and earnings overseas, seeking higher investment returns. As the world anticipates a crucial meeting between Chinese leader Xi Jinping and U.S. President Joe Biden, businesses remain cautiously optimistic. The diplomatic engagement witnessed over the past months hints at a desire to stabilise the relationship between the two economic powerhouses. However, the intricate web of economic uncertainties and geopolitical dynamics continues to cast a shadow on foreign investment in China. Bottomline The story of foreign businesses withdrawing from China is not just a statistical blip but a reflection of the intricate dance between economic giants. As the world watches these developments unfold, the outcomes of crucial diplomatic engagements and the economic strategies employed by nations will undoubtedly shape the trajectory of global investments in the post-pandemic era. WATCH WION LIVE HERE

China sees an investment exodus as global players pivot

New Delhi wants to block Chinese investors from buying shares in Indian insurance giant Life Insurance Corp (LIC) which is due to go public, four senior government officials and a banker told Reuters, underscoring tensions between the two nations.

State-owned LIC is considered a strategic asset, commanding more than 60% of India`s life insurance market with assets of more than $500 billion. While the government is planning to allow foreign investors to participate in what is likely to be the country`s biggest-ever IPO worth a potential $12.2 billion, it is leery of Chinese ownership, the sources said.

Political tensions between the countries rocketed last year after their soldiers clashed on the disputed Himalayan border and since then, India has sought to limit Chinese investment in sensitive companies and sectors, banned a raft of Chinese mobile apps and subjected imports of Chinese goods to extra scrutiny.

"With China after the border clashes it cannot be business as usual. The trust deficit has significantly widen(ed)," said one of the government officials, adding that Chinese investment in companies like LIC could pose risks.

The sources declined to be identified as discussions on how Chinese investment might be blocked are ongoing and as no final decisions have been made.

India`s finance ministry and LIC did not respond to Reuters emailed requests for comment. China`s foreign ministry and commerce ministry did not immediately respond to requests for comment.

Aiming to solve budget constraints, Prime Minister Narendra Modi`s administration is hoping to raise 900 billion rupees through selling 5% to 10% of LIC this financial year which ends in March.

The government has yet to decide on whether it will sell one tranche of shares seeking to raise the full amount or choose to seek the funds in two tranches, sources have said.

Under current law, no overseas investors can invest in LIC but the government is considering allowing foreign institutional investors to buy up to 20% of LIC`s offering.

Options to prevent Chinese investment in LIC include amending the current law on foreign direct investment with a clause that relates to LIC or creating a new law specific to LIC, two of the government officials said.

They added that the government was conscious of the difficulty in checking on Chinese investments that could come indirectly and would attempt to craft a policy that would protect India`s security but not deter overseas investors.

A third option being explored is barring Chinese investors from becoming cornerstone investors in the IPO, said one government official and the banker, although that would not prevent Chinese investors from buying shares in the secondary market.

Ten investment banks including Goldman Sachs, Citigroup and SBI Capital Market have been chosen to handle the offering.

New Delhi wants to block Chinese investors from buying shares in Indian insurance giant Life Insurance Corp (LIC) which is due to go public, four senior government officials and a banker told Reuters, underscoring tensions between the two nations.

New Delhi wants to block Chinese investors from buying shares in Indian insurance giant Life Insurance Corp (LIC) which is due to go public, four senior government officials and a banker told Reuters, underscoring tensions between the two nations. State-owned LIC is considered a strategic asset, commanding more than 60% of India`s life insurance market with assets of more than $500 billion. While the government is planning to allow foreign investors to participate in what is likely to be the country`s biggest-ever IPO worth a potential $12.2 billion, it is leery of Chinese ownership, the sources said. Political tensions between the countries rocketed last year after their soldiers clashed on the disputed Himalayan border and since then, India has sought to limit Chinese investment in sensitive companies and sectors, banned a raft of Chinese mobile apps and subjected imports of Chinese goods to extra scrutiny. "With China after the border clashes it cannot be business as usual. The trust deficit has significantly widen(ed)," said one of the government officials, adding that Chinese investment in companies like LIC could pose risks. The sources declined to be identified as discussions on how Chinese investment might be blocked are ongoing and as no final decisions have been made. India`s finance ministry and LIC did not respond to Reuters emailed requests for comment. China`s foreign ministry and commerce ministry did not immediately respond to requests for comment. Aiming to solve budget constraints, Prime Minister Narendra Modi`s administration is hoping to raise 900 billion rupees through selling 5% to 10% of LIC this financial year which ends in March. The government has yet to decide on whether it will sell one tranche of shares seeking to raise the full amount or choose to seek the funds in two tranches, sources have said. Under current law, no overseas investors can invest in LIC but the government is considering allowing foreign institutional investors to buy up to 20% of LIC`s offering. Options to prevent Chinese investment in LIC include amending the current law on foreign direct investment with a clause that relates to LIC or creating a new law specific to LIC, two of the government officials said. They added that the government was conscious of the difficulty in checking on Chinese investments that could come indirectly and would attempt to craft a policy that would protect India`s security but not deter overseas investors. A third option being explored is barring Chinese investors from becoming cornerstone investors in the IPO, said one government official and the banker, although that would not prevent Chinese investors from buying shares in the secondary market. Ten investment banks including Goldman Sachs, Citigroup and SBI Capital Market have been chosen to handle the offering.

India likely to block Chinese investment in insurance giant LIC's IPO

China’s cabinet said on Wednesday it will allow more qualified foreign investors to make strategic investment in Chinese listed companies to increase sale of national bonds.

China will step up punishment for irregularities such as market manipulation and insider trading, and improve the transparency and quality of information disclosure by listed companies, the state broadcaster quoted the meeting as saying.

Foreign institutional investors can access the exchange bond and interbank markets, China's two main markets for bonds, through the dollar-denominated Qualified Foreign Institutional Investor (QFII) programme, and its yuan-denominated sibling, RQFII.

Also read:&nbsp;<a href="https://www.wionews.com/world/us-angered-as-wto-rules-in-chinas-favour-in-tariffs-case-327883" hreflang="en">US angered as WTO rules in China's favour in tariffs case</a>

China scrapped quotas for QFII and RQFII in June, to give qualified foreign institutions unlimited access to Chinese stocks and bonds.

Some institutional investors, including foreign central banks and monetary authorities and sovereign wealth funds can register for direct access to the interbank market through China Interbank Market (CIBM) Direct.

Bond Connect, introduced in July 2017, allows quota-free access to the interbank market through its "northbound" channel through Hong Kong. China has not launched a "southbound" channel, which would allow Chinese investors to invest in offshore bonds.

Who regulates the Chinese bond market?

The National Association of Financial Market Institutional Investors (NAFMII) regulates the interbank market, under the auspices of the People's Bank of China, with trading conducted through the China Foreign Exchange Trade System (CFETS).

The National Development and Reform Commission (NDRC), China's state planner, regulates enterprise bonds, a corporate debt instrument.

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China Central Depository and Clearing Co (CCDC) and the Shanghai Clearing House are the central depositories.

The exchange bond market is regulated by the China Securities Regulatory Commission (CSRC). Trading primarily takes place on the Shanghai and Shenzhen stock exchanges, with China Securities Depository and Clearing Co as the central depository.

What problems do foreign investors still face?

Investors say China lags far behind its developed-market peers in liquidity, ease of trading and market access.

Liquidity remains low as China's banks, pension funds, insurance companies hold&nbsp;on to&nbsp;their&nbsp;inventory&nbsp;because they cannot engage in bond lending, said Eugenie Shen, managing director and head of ASIFMA's Asset Management Group.

Foreign investors have few hedging tools, such as access to bond futures, she said.

China's practice of charging trading fees separately, rather than building them into the spread, has been problematic for asset managers, but Shen said she expects to see progress on conforming to global practice this year.

China’s cabinet said on Wednesday it will allow more qualified foreign investors to make strategic investment in Chinese listed companies to increase sale of national bonds.

China’s cabinet said on Wednesday it will allow more qualified foreign investors to make strategic investment in Chinese listed companies to increase sale of national bonds. China will step up punishment for irregularities such as market manipulation and insider trading, and improve the transparency and quality of information disclosure by listed companies, the state broadcaster quoted the meeting as saying. Foreign institutional investors can access the exchange bond and interbank markets, China's two main markets for bonds, through the dollar-denominated Qualified Foreign Institutional Investor (QFII) programme, and its yuan-denominated sibling, RQFII. Also read: US angered as WTO rules in China's favour in tariffs case China scrapped quotas for QFII and RQFII in June, to give qualified foreign institutions unlimited access to Chinese stocks and bonds. Some institutional investors, including foreign central banks and monetary authorities and sovereign wealth funds can register for direct access to the interbank market through China Interbank Market (CIBM) Direct. Bond Connect, introduced in July 2017, allows quota-free access to the interbank market through its "northbound" channel through Hong Kong. China has not launched a "southbound" channel, which would allow Chinese investors to invest in offshore bonds. Who regulates the Chinese bond market? The National Association of Financial Market Institutional Investors (NAFMII) regulates the interbank market, under the auspices of the People's Bank of China, with trading conducted through the China Foreign Exchange Trade System (CFETS). The National Development and Reform Commission (NDRC), China's state planner, regulates enterprise bonds, a corporate debt instrument. × China Central Depository and Clearing Co (CCDC) and the Shanghai Clearing House are the central depositories. The exchange bond market is regulated by the China Securities Regulatory Commission (CSRC). Trading primarily takes place on the Shanghai and Shenzhen stock exchanges, with China Securities Depository and Clearing Co as the central depository. What problems do foreign investors still face? Investors say China lags far behind its developed-market peers in liquidity, ease of trading and market access. Liquidity remains low as China's banks, pension funds, insurance companies hold on to their inventory because they cannot engage in bond lending, said Eugenie Shen, managing director and head of ASIFMA's Asset Management Group. Foreign investors have few hedging tools, such as access to bond futures, she said. China's practice of charging trading fees separately, rather than building them into the spread, has been problematic for asset managers, but Shen said she expects to see progress on conforming to global practice this year.

China alters foreign investment law to increase sale of national bonds

Chinese businesses are losing money. The pandemic is ravaging Chinese investments. A fragile economic recovery could lead to defaults within the Chinese bond market. Australia has blocked a takeover bid by a Chinese firm. Palki Sharma Upadhyay has more.

Gravitas: Is Chinese cash turning into kryptonite?