Will China's Socialist Leaning Reforms Impact Japanese Investments?
3 Min Read
As China seeks to fulfill its second-centennial aim of fully constructing a modern socialist country, Japanese businesspeople in China say they are dissatisfied with Beijing's current stance, which they believe would limit spending and investment.
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The Chinese Communist Party has been increasing supervision of the country's IT Giants to curb monopolistic behavior (Source: Luo Wei Bj - Imaginechina)
The campaign by Chinese President Xi Jinping to attain "common prosperity," aimed at closing the economic gap at home, has worried Japanese corporations that the world's most populous country may become a less appealing market in the future.
Xi said earlier this year that the ruling Communist Party had achieved its long-held objective of creating a "moderately prosperous society," his leadership appears to have begun imposing severe limitations on the wealthy attempting to reduce economic inequality, a report by Kyodo News says.
The annual China International Import Expo will be held in Shanghai from Nov. 10 to 11, as Xi tries to demonstrate to the world his commitment to free trade as economic and technical tensions with the US are on the Rise.
However, Japanese businesses in China say they are dissatisfied with Beijing's present policy path, which they believe will limit spending and investment by China's wealthy, impeding the country's overall economic progress.
"Our best scenario is that the Chinese economy would continue to grow"
An employee of a Japanese firm, Kazuya Nakayama said that “Should the Communist-led government focus too much on income distribution by siphoning money from the rich, the number of those who want to buy our products would definitely decrease in China.”
“Our best scenario is that the Chinese economy would continue to grow and the country’s affluent people would further increase their purchasing power. If the Chinese market becomes more socialistic, we may have to reconsider our business strategy,” Nakayama continued.
Global Times: Common prosperity is “in line with both the facts of economic development“
The Chinese Global Times reported that “Minimising use of income from the capital for luxury consumption, rather than property income being used for investment, is a very serious economic issue both in the US and in China.”
Common prosperity is “in line with both the facts of economic development and with economic theory,” the newspaper added.
So what are the regulations China is trying to implement?
Since Xi's proclamation about the moderately prosperous society previously mentioned, the Chinese government has tightened market rules in areas such as the internet, education, entertainment, and real estate — industries that favored the wealthy in particular while the country's economy grew rapidly.
The Chinese Communist Party has been increasing supervision of the country's IT Giants to control their monopolistic behavior and unruly capital expansion.
The central government appears to be forcing Chinese major businesses and business leaders to share their riches for the general good by making donations and giving social support to lessen wealth gaps.
According to state-run media, Alibaba Group, China's leading IT corporation that has evolved into one of the world's largest e-commerce enterprises, has pledged to contribute 100 billion yuan (US$15.6 billion) by 2025 to promote common prosperity. The South China Morning Post is owned by Alibaba.
While enacting several regulations aimed at tutoring agencies to relieve children of their high academic burdens and solve unfair competition, Chinese authorities have begun to crack down on the entertainment industry.
With the entertainment business flourishing in China, Xi's leadership is reported to be enforcing stringent controls on tax evasion and other crimes by people seen as emblems of riches.
