China begins crack down on foreign consultancy firms


Foreign firms in China have been warned before. In 2020, Beijing’s market regulator launched probes into western consulting firms. But Xi didn’t think that effort went far enough. This time around, he put his state-security czar in charge

“Securocrats” are replacing technocrats whose backgrounds in economics and finance once made them key to establishing China’s credibility with global investors and businesses. What’s emerging is an entire government apparatus geared toward domestic security…

Some Western firms have paused research work in China, especially when related to tech and other sensitive areas. Even sell-side analysts said they are worried about getting their contacts in China in trouble because of the heightened government scrutiny over foreign connections.

Beijing still talks about the need to attract foreign investments. But gone is enthusiasm for all types of foreign investment. The emphasis these days is on getting “high-quality foreign investments.” American companies say they’re feel increased pressure …

… from the central government to localize products and secure supply chains in China. “The securocrats do not place as much weight on foreign investments. They see threats posed by foreign firms outweighing the value the firms bring.”





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