DECOUPLING: China’s US trade war charm offensive was meant to stop foreign investors from leaving, but is it working?

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Beijing’s promises of further opening up is also a key part of its defence of China’s place in
global value chains

. China’s status as the workshop for the world has for years been steadily eroded by rising domestic costs, even before the outbreak of the trade war, leading to a long list of foreign manufacturers throwing in the towel, seeking cheaper production bases in countries like Vietnam and India.

South Korean manufacturing giant Samsung, for example, recently shut down its last mobile handset factory in China.

In an article published in Huanqiu, a website affiliated with the Communist Party mouthpiece Global Times on Monday, Wei Jianguo, a former vice-minister of commerce, implied that China’s opening has limits, even in designated “free trade” pilot zones.

Wei said that while the zones would lower market barriers and improve intellectual property protection for foreign firms, they will not “go laissez-faire” or embrace “neoliberalism from the West”. All of China’s moves to open up must support the central goal of building up “a socialist market economy”, Wei noted.

Beijing has also made it clear that it will not give up its unique economic model or loosen its grip in areas where China sees dangers. Many of Beijing’s recent liberalisation measures are “one-way streets” designed to encourage inflows while its draconian capital controls curb outflows.

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