China Introduces Sweeping FDI Reforms

[Aepsilons]

Without competition, companies will become inefficient. Which is bad for our overall economic growth, and thus bad for the people.

Even ICBC, the largest company in the entire world, does not have 100% market share in our domestic market. Nowhere close.

Because that leads to inefficiency. There is a reason why monopolies are a classic example of market failure.

The Chinese government is not stupid, they understand economics just as well (or maybe better) than many other governments.

I always predicted that sooner or later, the economic integration between the three largest economic players in Asia : China-Japan-USA.

This thread makes me happy. Everyone profits, prospers.

 

[Aepsilons]

How do you become a world champion if you only compete with yourself?
Our Olympic champions compete with the best in the world, and in many cases beat them.
Our Private companies like Lenovo and Haier are now the number 1 in the entire world in their respective markets. And once Lenovo acquires half of HP, they will have something like 40% of the global market share.

Precisely ! In the end this will benefit everyone and the Chinese domestic companies will effect leverage on their products by improving through analysis of competitors' key technology. The same also applies for ours with China's own advancing domestic technology. For example, Lenovo, Huawei, Dongfeng, Chery -- all are examples of successful domestic Chinese brands.

I would also mention that Nissan and Dongfeng are cooperating with each other in the auto industry; the byproduct (child) of this union is the new industrial plant that just opened in Dalian, China. Nissan Motor Corp and Dongfeng Motor Corp have effectively joined hands.

 

[Jlaw]

My worse fear for China is becoming reality.

Correct bro. I see no benefits for China to allow foreign ownership of their banks regardless of percentage of ownership.
It makes it easier for foreign infiltration of your economy.

 

[tranquilium]

No, in many cases, competition leads to inefficiency and duplication. Why do power companies not build competing power lines? Why do telecom companies not produce competing fiber optics lines? Why do water companies not build competing water mains? Because that's inefficient - instead, they're usually geographic monopolies.

This is another example of duplication and inefficiency. Why invite foreign companies to compete with Chinese ones, if the Chinese ones are 1.) already competing against each other to insure efficiency and 2.) adding more competitors will create duplication and waste?

There is a reason the reform is done only to certain industries, but not the others. It is rather pointless trying to use the standard for industry for another. For the record though, power industry is not building competitive lines only because there is regulatory agency preventing the companies and associated industry from doing that. In some place, there are actually the issue as you described. For example, in Japan, there are actually two electric systems with different frequencies. (50Hz for east Japan and 60Hz for west Japan)

 

[FairAndUnbiased]

You think we can't compete? That's what foreigners tend to think, and they always get surprised when we beat them. We have the largest manufacturing base in the world, and we are the largest exporters in the world. How? We took on and beat the competition. People can choose to import products from anywhere in the world, and they choose China. Because we beat them where it counts, in terms of efficiency.

We are still a developing country yes, and thus some sectors still need to be protected. But the Chinese government is the one best placed to decide which sectors to protect, and which sectors to open up. And frankly I trust their judgement a lot more than some naysayers on the internet.

The competition you are talking of is on international markets. This is about the domestic market. There is a huge difference between the domestic and international markets. The reason companies were able to compete on the international market is precisely because they were protected at home and could thus experiment with new products and policies without fear of losing market share, then take successful examples global. There is a reason why the US and Japan are two of the most protectionist economies.

You should not blindly support the government in everything they do - there is potential for mistakes in all cases. Best example: privatization of education and healthcare in the late 90's, leading to problems with medical coverage until 2008 when rural health insurance reforms came out. That's 10 years of stagnation in a sector. Can you afford 10 years of stagnation?

 

[FairAndUnbiased]

There is a reason the reform is done only to certain industries, but not the others. It is rather pointless trying to use the standard for industry for another. For the record though, power industry is not building competitive lines only because there is regulatory agency preventing the companies and associated industry from doing that. In some place, there are actually the issue as you described. For example, in Japan, there are actually two electric systems with different frequencies. (50Hz for east Japan and 60Hz for west Japan)

Is that not an example of duplication and waste? That means there will be 2 sets of entirely different power equipment and electrical appliances to work with each frequency, and the 2 networks cannot send electricity to each other in emergencies.

 

[kyle Chiang]

So that means more foreign owned companies will be here to devastate Chinese social and physical environment while sending profits back overseas. Lol at the people cheering for this. Just more sheep.

Thanks to these companies' devastating Chinese social and physical environment.Now China is the No2 in economic volume.And lots of commercial talents springs out.

 

[Chinese-Dragon]

You should not blindly support the government in everything they do - there is potential for mistakes in all cases. Best example: privatization of education and healthcare in the late 90's, leading to problems with medical coverage until 2008 when rural health insurance reforms came out. That's 10 years of stagnation in a sector. Can you afford 10 years of stagnation?

I don't blindly support what my government does.

I support them because they are right, and it is backed up by basic economic principles.

Our growth target is 7.5%, we need that to provide enough jobs for our people. Now it's falling to 7.3%, tell me what should the government do to sustain our growth rate? If not economic reforms like this, that can boost the efficiency of our economy?

When you talk about one company having 100% market share, yes that is great for the company in question. They don't need to worry about efficiency and productivity, since there are no other competitors, they can simply raise the price to keep up their profits. They can let their costs and inefficiencies spiral out of control, and still charge high prices, since there are no competitors they will always be highly profitable.

The company wins. But who suffers? The Chinese people, and the Chinese economy.

Our growth rates over the past three decades have already defied history, no other country has kept up high growth rates for such a long period of time. But due to our large population, that is not enough. We need to keep the high growth rates for longer, the livelihood of our people depends on it, and economic reforms are the most fundamental way to ensure that happens.

 

[bolo]

Without competition, companies will become inefficient. Which is bad for our overall economic growth, and thus bad for the people.

Even ICBC, the largest company in the entire world, does not have 100% market share in our domestic market. Nowhere close.

Because that leads to inefficiency. There is a reason why monopolies are a classic example of market failure.

The Chinese government is not stupid, they understand economics just as well (or maybe better) than many other governments.

japanese and korean still protect their domestic companies from mainly western competition. japanese industries are more mature than Chinese.
If you think it's good for China keep cheering. Many Chinese were so happy when Modi was elected thinking he is 'business friendly' , boy some Chinese got a wakeup call.

 

[bolo]

No, in many cases, competition leads to inefficiency and duplication. Why do power companies not build competing power lines? Why do telecom companies not produce competing fiber optics lines? Why do water companies not build competing water mains? Because that's inefficient - instead, they're usually geographic monopolies.

This is another example of duplication and inefficiency. Why invite foreign companies to compete with Chinese ones, if the Chinese ones are 1.) already competing against each other to insure efficiency and 2.) adding more competitors will create duplication and waste?

Plus japan boy nihonjin like it how can this be a good thing for China? Ask him why japan is still so protective of their industries.
Some Chinese here have limited knowledge of economics or have not lived in countries where foreign competition nearly killed the domestic companies.

 

[Chinese-Dragon]

japanese and korean still protect their domestic companies from mainly western competition. japanese industries are more mature than Chinese.
If you think it's good for China keep cheering. Many Chinese were so happy when Modi was elected thinking he is 'business friendly' , boy some Chinese got a wakeup call.

Actually we were happy when Modi was elected, because Indians electing a mass murderer of Muslims is the surest way to break the very foundations of the Indian Union, i.e. "Unity in diversity".

There was never any belief that India could take away our manufacturing in any meaningful way, most of the lower end manufacturing is going to Southeast Asia who are far superior in terms of infrastructure, red tape and supply chains.

As for the decision of the Chinese government, yes as a Chinese citizen I cheer for it. Because we need that growth.

Foreigners are always second-guessing the economic decisions of the Chinese government, and guess what. They always end up with egg on their face. This time will be no different.

 

[bolo]

Thanks to these companies' devastating Chinese social and physical environment.Now China is the No2 in economic volume.And lots of commercial talents springs out.

No, foreign companies who came in had to set up JV with Chinese companies. This new policy will eliminate those policies. Hope you pray your gods for help.
For thirty years China was exporting and protected their industries from foreign competition.
Good luck China, you're going to need it.

 

[Chinese-Dragon]

Good luck China, you're going to need it.

Just watch as we continue to soar.

Anyone who doubts it can put there money where their mouth is, and bet against us in the stock markets.

 

[bolo]

Actually we were happy when Modi was elected, because Indians electing a mass murderer of Muslims is the surest way to break the very foundations of the Indian Union, i.e. "Unity in diversity".

There was never any belief that India could take away our manufacturing in any meaningful way, most of the lower end manufacturing is going to Southeast Asia who are far superior in terms of infrastructure, red tape and supply chains.

As for the decision of the Chinese government, yes as a Chinese citizen I cheer for it. Because we need that growth.

Foreigners are always second-guessing the economic decisions of the Chinese government, and guess what. They always end up with egg on their face. This time will be no different.

CPC is getting too cocky. Don't cry when domestic companies go bankrupt or being brought up by foreigners. Btw i live in Canada, 72% of our economy is foreign owned, mainly US controlled. When recession hit, US companies lay off Canadian workers. We have been screwed for decades to the point that our foreign policies align with US. We have very little sovereignty.

 

[Chinese-Dragon]

CPC is getting too cocky. Don't cry when domestic companies go bankrupt or being brought up by foreigners. Btw i live in Canada, 72% of our economy is foreign owned, mainly US controlled. When recession hit, US companies lay off Canadian workers. We have been screwed for decades to the point that our foreign policies align with US. We have very little sovereignty.

If you gave up your sovereignty so easily to America, then why should we take your advice? The advice of an American vassal (the voice of Washington DC) wouldn't be in our interests, would it?

And it's the opposite way around. Chinese companies are buying up everything worldwide, Lenovo is already the number 1 PC maker in the world, and they are in discussions to buy up the Canadian Blackberry and half of America's HP computers. The latter of which will give them around 40% of the global market share.