One Belt, One Road: A New Beginning for China Relations

China’s New Investment Strategy: A Reality Check

By School of Management and China Business Studies Initiative Posted Fri, 09/04/2015 - 10:33

China Business Studies Initiative in the School of Management, the University of San Francisco (USF) hosted “China’s New Investment Strategy: A Reality Check” in late August to spur conversation around investment relations between the U.S. and China.

The event featured experts on U.S.-China investment relations, One Belt One Road (OBOR), the Asian Infrastructure Investment Bank (AIIB) and how changes in Chinese equity markets are likely to affect Chinese outbound investment.

“I spent nearly half of my life in China and I go back every year. Every time I return, I see a new China. What is happening in China within the last few months truly shocked the world,” said Xiaohua Yang, professor of International Business and the director of China Business Studies Initiative.

 “The School of Management has a very long and deep connection with China. We started one of the first MBA programs to reach China. If you look at our MBA alumni we have almost 100 recent graduates that are poised and running businesses in China. We have roughly 500 undergraduates from the SOM who are now back in China and part of the business community,” said School of Management Dean, Elizabeth B. Davis.

With the recent stock market crash many things are changing within China, including their relations with other countries. 

“One of the things that is a consequence of the recent turmoil in the investment markets in China is that it is part of a bargain that the Chinese government has made with its people that the legitimacy of the government is very closely tied to continuing a robust economy,” said panelist Tim Kochis, founder of Kochis Global. “When that bargain is broken, if it ever were to be broken, then the communist party’s control could likely be threatened.”

Chinese President Xi Jinping announced the OBOR initiative in late 2013. Even though the U.S. is not on the OBOR route, many experts are still very interested. 

Although the U.S. is a little far away from China’s OBOR, the business road between China and U.S. has never been broader,” said Xia Xiang, the forum’s keynote speaker. Xia also described China’s economy in three words: speed, structure and motivation, “China’s economy needs to go from high speed to medium high speed.”

FORUM COVERED IN NEWS VIDEO 

Xia, Economic and Commercial Counselor Consulate General of the People’s Republic of China in San Francisco, has been instrumental in building a bridge between San Francisco’s Chinese business community and China.

The OBOR initiative is aimed at creating infrastructure, strengthening cultural exchanges, and expanding trade.

“We don’t know if this will succeed. There’s no guarantee. China’s dependence on foreign energy is huge. This is the Achilles heel in China,” said panelist Charles Field, counsel in the San Diego office of Sanford Heisler Kimpel, LLP.

Some experts believe OBOR won’t work and lead to another economic crash and others remain optimistic.

“I have heard a lot of pessimistic predictions that the China economy will crash. The overall conclusion I get is there’s no obvious reason why China will crash,” said Panelist Wayne Wang, CEO and Founder of CDP Group, Shanghai. “The fundamentals won’t change. The growth is slowing but think about the size of China.”

Marshall Meyer, emeritus professor at Wharton Business School, had one piece of advice for both President Xi Jinping and President Obama when they meet in late September: “build a little trust and use that trust as basis for further communication.”

By Brandi Licciardo