In an effort to persuade foreigners to continue investing in the second-largest economy in the world despite its recent weakness and mounting geopolitical tensions, China’s financial authorities have invited some of the wealthiest investors in the world to a rare symposium next week, according to three sources.
According to the people with direct knowledge of the situation and the invitation documents examined by Reuters, the conference will take place in Beijing on Friday and will be centered on the state of US dollar-denominated investment enterprises in China right now as well as the major issues and obstacles they are facing.
The event takes place at a time when international banks and investors are issuing warnings that optimism regarding China’s economic outlook is dwindling. Sino-US ties are at an all-time low due to national security challenges, including Taiwan, US export restrictions on cutting-edge technologies, and China’s state-led industrial policy. The post-pandemic recovery is rapidly losing steam.
According to the three sources, such meetings with a focused agenda to discuss issues facing international fund managers investing in China are uncommon but show Beijing’s desire to increase investor confidence.
Large foreign and domestic fund managers, such as general partners (GPs) in private equity companies and their limited partners (LPs), such as sovereign wealth funds and pension funds, are anticipated to attend the meeting, according to the sources.
According to the sources and papers, they will also be urged to discuss their perspectives on the economy and offer solutions to issues plaguing their enterprises in China.
The sources stated that the international funds attending will probably send their senior staff members who are headquartered in China.
China’s economy grew by barely 3% in 2022, one of its weakest performances in decades, as a result of the stringent COVID regulations. Early this year, after the restrictions were abruptly eased, it recovered, but since then, policy uncertainty and tensions between China, the US, and other Western powers have grown.
The meeting also takes place at a time when some PE firms and their investors are reevaluating their China strategies in the wake of a brutal crackdown on private businesses, like tech companies, that has lasted for years and cast a long shadow over PE investors’ return prospects and reduced investment opportunities, according to separate sources who spoke to Reuters.
Two of the sources state that Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), the nation’s securities regulator, will speak to the audience.
The Asset Management Association of China (AMAC), the country’s fund regulator, coordinated the gathering. In response to Reuters’ inquiries, the AMAC delayed its response.
An 8-month low in the yuan and months of poor economic data have caused some investors to abandon their China strategy, with the MSCI China Share Index down 2% on the year compared to a 15% rise for global stocks.
According to data from industry tracker Preqin, fundraising by venture capital and PE companies with a focus on China had its worst first half this year.
According to Preqin statistics, China-focused GPs only raised $5.5 billion in capital denominated in US dollars in the first half of the year, a significant decrease from the peak of $27.6 billion raised during the same period in 2021.
The conference also comes after officials hinted last week that a crackdown on the technology sector that started in late 2020 had resulted in fines for Ant Group and Tencent.
Premier Li Qiang met with companies including Alibaba’s cloud division and Meituan on Wednesday and encouraged them to do more to boost China’s economy as yet another clear indicator that the crackdown is gone.
