[Meanwhile] Jack Ma returns, China reopens
YOU SANG-CHULThe author is the head of the China Institute of the JoongAng Ilbo and CEO of China Lab.
China is changing. Noticeable are two changes. One is the appeasing of private companies, symbolized by Jack Ma’s return to China. The other is an emphasis on opening and eagerness to attract foreign investment.
These began in earnest when the third Xi Jinping government was formed through the “two sessions” in mid-March. First, let’s look at Beijing embracing private companies. Starting with beating on Ma, China interfered with a series of big tech companies.
Under the banner of mutual prosperity, many heads of private companies had to give up management rights or participate in forced donations of astronomical amounts. In particular, party branches were installed within private companies, and private companies were completely wiped out.
Then, at the end of last year, Xi declared, “I have consistently supported private companies,” and the government’s rigid stance changed completely. Now, Jack Ma, who had been wandering abroad for about a year, has been called in. The news of Ma’s return was powerful enough to make Alibaba’s stock price surge.
The second change is the emphasis on opening. After the trade war with the U.S. intensified, China presented the “dual circulation” strategy. The goal is the mutual promotion of the international and domestic cycles.
But it represents China’s focus on domestic demands after cooperation with other countries became difficult due to America’s pressure. Some thought China was closing its doors. With the “zero-Covid” policy, foreign investors, companies and wealthy Chinese started to leave the country. In the end, the Chinese economy was in jeopardy, especially local governments.
Local governments have been in debt to fund Covid-19 PCR test costs in addition to the real estate slowdown. Some local governments could not even pay employees and had to reduce the workforce. So now, Beijing advocates opening and attracting foreign investment.
The latest changes in China are focused on reviving the economy. It is noteworthy that Chinese delegations from local governments are flocking to Korea to attract investments. So much has changed from when Korean companies were contemplating how they should withdraw their businesses from China.
However, if China calls again, should they go? China risks still remain, as Lotte left the Chinese market. That’s not all. Beijing’s restrictions on the Korean wave and group tours to Korea are still in place.
But businesses can hardly turn away from the 1.4 billion Chinese market, which is urgently opening its doors to Korean companies. Ultimately, it is up to Korea how to utilize China’s changes. Korean companies must deal with China carefully while meditating on why they had to withdraw.
with the Korea JoongAng Daily
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