Global investment giant Vanguard has finalized severance agreements with its remaining staff in Shanghai, including country head Luo Dengpan, as it withdraws from China. This decision comes after a series of disputes and retaliatory measures by China, including exit bans, raids, and arrests of foreigners, which have raised concerns about the country’s investment climate.
The exit of Vanguard from China is significant, considering its stature as a major player in the global investment market. The company’s decision to sever ties with China may have a ripple effect on other international investors, who may now question the stability and predictability of China’s business environment.
China’s retaliatory measures, such as exit bans and arrests of foreigners, have particularly rattled investors around the world. These actions not only undermine the trust and confidence of foreign businesses in China, but also paint a negative image of the country’s investment climate. The Chinese government needs to address these concerns in order to attract and retain foreign investment.
Furthermore, the “securitisation” of the US-China economic relationship is becoming a pressing issue that needs to be managed effectively. The Trump administration initiated the trade war with China in 2018, and the Biden administration has continued to escalate tensions in various sectors, such as technology and trade. This approach, driven by national security concerns, has led to a perception that Washington views almost every aspect of its economic ties with China through a security lens.
For example, Chinese-owned short-video sharing platform TikTok has faced increased scrutiny due to concerns about national security. Even Chinese-made electric buses operating in US cities have raised security concerns. Beijing sees this securitisation as an unfair portrayal of China and blames the US for all the perceived problems in the bilateral relationship.
China’s President Xi Jinping and US President Joe Biden are expected to meet in San Francisco later this month. While their focus is likely to be on the Taiwan issue, it is essential for them to address the securitisation of the economic relationship between the two countries. Beijing should consider toning down its high-profile anti-espionage campaign and reviewing its exit ban policy, as these measures are seen as chilling and discouraging for investors.
Lawmakers in the US are also calling on the Biden administration to limit China’s access to RISC-V, a budding technology used in designing semiconductor chips. This further highlights the ongoing competition and tensions between the two countries in the technology sector, which is seen as crucial for maintaining economic dominance and national security.
In conclusion, Vanguard’s withdrawal from China signifies the growing concerns about the country’s investment climate. China needs to address these concerns and ensure a stable and predictable business environment to maintain its attractiveness to foreign investors. The securitisation of the US-China economic relationship also needs to be managed effectively to avoid further escalation and maintain a stable bilateral relationship.
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