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Video: Interview Adam Dunnett and Michael Pettis on foreign investment

04-02-2011 17:22 BJT

 

Intro:

Back to the city! To spark some debate about how the 12th 5-year program will affect foreign investors.

VERITY : CBD Beijing
Now I’m in Beijing Central Business District. These big imposing buildings certainly denote prosperity, but there’s something that fuelling hot debate among business circles.  Some argue that China’s less attractive to foreign investors. They say there’s a lack of transparency. That rules seem unpredictable. They want to ‘level the playing field.’ Make things open. Make things fair.  Why can’t they join the global shopping spree?  But is there another side to the coin? And will things change over the next 5 years?

Adam Dunnett, General Manager, European Union Chamber of Commerce in China

Adam: Last year there was a lot of concern. There was a lot of play in the media about the investment environment. We actually conducted a study with our members and we asked them for their opinions. They told us that they are confident in the market itself. They see strong growth for China. For many companies, this is the leading market opportunity for them. However, our members told us, approximately 39 percent, said they feared that the regulatory environment would become worse for them in the coming two years. And I think last year there were a number of examples where there was a misunderstanding or there was a lack of public consultation or there was a surprise announcement. I think that gathered a lot more attention than anyone expected. And I think that was a big driver of the discontent that you saw.

Michael Pettis. Professor of Finance, Peking University

Verity: Do you agree with concerns from some that China is not really an attractive investment environment for foreign investors? What’s your view on that?

M.Pettis: I have a slightly different view than many other people do. I do think it’s a difficult environment for foreign industries but many industries say it's a difficult environment because of government procurement or because of unfair regulations.

And my view is that historically any country, whether it's Brazil, Japan or whatever, any country that’s had very rapid investment driven growth generated by very low interests. Foreign companies always complain that its very difficult environment for foreign companies. So my suspicion is that there is nothing to do with regulations or government procurement but it has to do with cost of capital.

If you have access to very very cheap capital you have a huge advantage over everybody else. Chinese companies, large companies, SOE’s have access to cheaper capital. Foreign companies don't. So as interest rates in China move up to a more reasonable level, my guess is that those kind of complains will wither away whether or not china takes concrete steps to make foreign investment more welcome.

 

Editor:James |Source: CNTV

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