In the news: President Xi promotes global trade at Davos, U.S. companies feel more unwelcome in China and the PBOC looks into bitcoin

Study finds U.S. companies shelving China investments

An annual survey of members of the American Chamber of Commerce in China, which represents 900 companies, released Wednesday found that the percentage of businesses that rate China among their top three investment targets fell to 56%, the lowest since 2009. Four out of five companies said they felt less welcome in China than before, nearly double the rate from three years ago. A total 462 responses were collected online between October 26 and November 27, (the survey began before Trump's election on November 8). 72% of companies said positive relations between Beijing and Washington were “very” or “extremely” important to their business growth in China, while only 17% expected ties to improve over the next year. And despite China's continuous pledges to treat foreign and domestic companies equally, 55% felt foreign businesses were unfairly done by. The chamber said it would reach out to the Trump administration next month to recommend that the U.S. be more aggressive in talks with China regarding leveling an unfair playing field. A bright spot was a revenue rebound, with 58% seeing YoY sales growth in 2016. Southern Guangdong province and Beijing were top investment priorities, the report showed. The flurry of laws released in 2016, including the controversial Cybersecurity Law and Anti-terrorism Law, may have something to do with the increased uncertainty. Companies have had to ramp up compliance efforts and beef up resource allocations as regulators get tougher on wrongdoing and rework what constitutes violations across the board. China has often shown that it can vow it is heading in one direction, and then abruptly change course. For instance, it has repeatedly signaled it would ease capital controls, but it is now in the midst of what appears to be its most intense effort to dissuade outflows. Putting money in isn't that difficult, but getting it out is quite another story.

China puts bitcoin on regulatory radar

The People's Bank of China (PBOC) launched spot checks on leading bitcoin exchanges, including BTCC in Shanghai and Huobi and OKCoin in Beijing, to look into possible violations such as market manipulation, money laundering and unauthorized financing. The move knocked the price of the cryptocurrency down more than 12% against the U.S. dollar. While the renminbi lost more than 6.5% against the dollar last year—its worst performance since 1994—the bitcoin price soared to near-record highs. Its performance and anonymity awarded to investors has prompted some to believe bitcoin has become an attractive option for tech-savvy Chinese to hedge against the renminbi and work around rules limiting individuals' annual foreign exchange purchases. On January 13, all three exchanges revised their margin trading policies after receiving guidance from the central bank. The PBOC views bitcoin as a volatile and unregulated currency, but its efforts to bring the digital currency into a legal domain with a stamp of approval with legislation will may just have a positive impact.

President Xi defends globalization at WEF

President Xi Jinping launched a robust defense of globalization and free trade at the World Economic Forum in Davos on Tuesday. Countries should refrain from pursuing their own interests at the expense of others, he said, and that there would be no winner in case of a trade war, pledging that China would not seek to benefit from renminbi devaluation or a currency war. He added that global governance systems should be overhauled from their outdated Western-centric order to a mechanism that meets the requirements of emerging markets and is able to resolve problems such as frequent volatility and build-up of asset bubbles. After a market-shattering Brexit vote and politically-dividing Trump election in 2016, China, as the world's second-largest economy, appears to have taken the stage to try and reassure the international community that it is making efforts to maintain stability and promote open investment and trade. And with Trump's anti-China campaign and post-victory Twitter rants, Xi seemed to hint that the President-elect should focus on more profound matters. He even hailed the Paris climate change accord—which Trump threatened to abandon— as “a hard-won agreement” that “all signatories should stick to”. That said, the renminbi weakened 6.5% in 2016, the most in more than 20 years, as China was seen guiding its exchange rate lower to help exports. So while Xi talks gentility, it may not fly with Trump, who has threatened to brand Beijing a currency manipulator and slap 45% tariffs on imports from China.

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Study finds U.S. companies shelving China investments

An annual survey of members of the American Chamber of Commerce in China, which represents 900 companies, released Wednesday found that the percentage of businesses that rate China among their top three investment targets fell to 56%, the lowest since 2009. Four out of five companies said they felt less welcome in China than before, nearly double the rate from three years ago. A total 462 responses were collected online between October 26 and November 27, (the survey began before Trump's election on November 8). 72% of companies said positive relations between Beijing and Washington were “very” or “extremely” important to their business growth in China, while only 17% expected ties to improve over the next year. And despite China's continuous pledges to treat foreign and domestic companies equally, 55% felt foreign businesses were unfairly done by. The chamber said it would reach out to the Trump administration next month to recommend that the U.S. be more aggressive in talks with China regarding leveling an unfair playing field. A bright spot was a revenue rebound, with 58% seeing YoY sales growth in 2016. Southern Guangdong province and Beijing were top investment priorities, the report showed. The flurry of laws released in 2016, including the controversial Cybersecurity Law and Anti-terrorism Law, may have something to do with the increased uncertainty. Companies have had to ramp up compliance efforts and beef up resource allocations as regulators get tougher on wrongdoing and rework what constitutes violations across the board. China has often shown that it can vow it is heading in one direction, and then abruptly change course. For instance, it has repeatedly signaled it would ease capital controls, but it is now in the midst of what appears to be its most intense effort to dissuade outflows. Putting money in isn't that difficult, but getting it out is quite another story.

China puts bitcoin on regulatory radar

The People's Bank of China (PBOC) launched spot checks on leading bitcoin exchanges, including BTCC in Shanghai and Huobi and OKCoin in Beijing, to look into possible violations such as market manipulation, money laundering and unauthorized financing. The move knocked the price of the cryptocurrency down more than 12% against the U.S. dollar. While the renminbi lost more than 6.5% against the dollar last year—its worst performance since 1994—the bitcoin price soared to near-record highs. Its performance and anonymity awarded to investors has prompted some to believe bitcoin has become an attractive option for tech-savvy Chinese to hedge against the renminbi and work around rules limiting individuals' annual foreign exchange purchases. On January 13, all three exchanges revised their margin trading policies after receiving guidance from the central bank. The PBOC views bitcoin as a volatile and unregulated currency, but its efforts to bring the digital currency into a legal domain with a stamp of approval with legislation will may just have a positive impact.

In the news: President Xi promotes global trade at Davos, U.S. companies feel more unwelcome in China and the PBOC looks into bitcoin

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