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REGIONSASIA-PACIFIC


BEIJING IS TARGETING 7% ANNUAL GROWTH IN INNOVATION SPENDING TO 2025, BUT DOUBTS REMAIN


China’sR&D bidtolureFDI


Uyghur genocide slows region’s FDI


CHINA


Foreigninvestment in Xinjiang has come under global scrutiny aswest- erngovernments condemn the geno- cide of Uyghur Muslims in the region.OnMarch22, the US, UK, Canada andEUimposed sanctions, including asset freezes and travel bans, on senior government officials and the Xinjiang Production and Construction Corps. Although Xinjiang is not known


as amajor destination for foreign investment, it attracted 43 greenfield investment projectsworth$5.7bn between 2003 and 2020. The sector drawing themost projects is transpor- tation&warehousing, and themost active source market is the US, which announced eight projects regionally. Several notable international


‘Innovation-driven development’ is a key part of China’s plans


China has boosted its targets with regards to research and development (R&D) spending and improved business conditions to attract a newwave of FDI, but concerns over the impact of the decoupling of the Chinese market still remain. In its 14th Five-Year Strategic


Plan, the government has announced that it will increase R&D spending by 7% annually between this year and 2025. According to preliminary government data, its total expenditure on R&D rose 10.3% in 2020 to 2.44 trillion yuan ($374.3bn) from the previous year, putting its R&D as a ratio of GDP at a record 2.4%. “Both the National 14th Five-Year


Strategic Plan and the Shanghai municipal government’s work report for 2021 including ‘innova- tion-driven development’ play key roles to provide solid support for the innovation and development of foreign-funded enterprises in China, which is greatly encouraging,” Will Song, global senior vice president and China chairman at US-based pharmaceutical company Johnson & Johnson said in a statement. In February, Johnson&Johnson


60


becamethe first foreign-funded open innovation platformaccredited by the Shanghai municipal government (see page 14) after it set out regula- tions last year to encourage foreign R&D centres to take root in the city. Policy support measures, which


range from customs clearance facili- tation for R&D and tax cuts to talent acquisition and participation in government projects, came into effect on December 1 2020 and will run until November 30 2025. Against a backdrop of continued


diplomatic tensions between the US and China, which began in 2018 under the Trump administration, businesses are cautious of betting too heavily on the technology sector in China amid fears that the two nations’ digital ecosystems are becoming mutually exclusive. Kyle Freeman, partner at law


firm Dezan Shira & Associates in Beijing, says foreign companies might look to “seize on some of the information” provided by the government and targets in the 14th Five-Year Strategic Plan and approach the Chinese market with what he terms a “conditional embrace”.■ SETHO’FARRELL


companies have had projects in the region, including Volkswagen, which invested $315.5m in a car plant in the city of Ürümqi in 2011. The German company has been questioned over possible use of forced labour in Xinjiang, but denies its involvement in thehuman rights abuses.■ NAOMIGALLAGHER


Myanmar investorson tenterhooks


Investors in Myanmar are look- ing on with trepidation amid concerns over the nation’s politi- cal stability, internet connectiv- ity and overseas sanctions. Protests have kept the interna-


tional spotlight firmly onMyanmar since February 1, when the armed forces, the Tatmadaw, staged a coup against the now-deposed state coun- sellor, Aung San Suu Kyi. The coup comes after a landslide victory for Ms Suu Kyi and her party, the National League forDemocracy (NLD), at the ballot box in November 2020, which the military claimed to be fraudulent. Due to ongoing nationwide


protests and intermittent internet shutdowns, businesses nowface operating at reduced capacity while unable to contact their employees, whose safety is potentially at risk.■ SETHO’FARRELL


www.fDiIntelligence.com April/May 2021


$5.7BN


VALUEOFGREENFIELDINVESTMENT PROJECTSATTRACTEDBYXINJIANG BETWEEN2003AND2020


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