The Myth of “Investibility”

Fang Fenglei’s recent comments have reignited a familiar conversation in financial circles about the China investment debate. However, scratch beneath the surface, and it becomes clear that this is not a genuine debate at all. Investors like Fang have been shaping China’s capital markets for decades.

His career is a testament to this. He helped create CICC and chaired a joint venture with Goldman Sachs. Today, as chairman of Hopu Investments, he is one of the few voices who can speak authoritatively on the matter.

The notion that foreign investors are skeptical about investing in China because its economy has “peaked” oversimplifies the issue. In reality, institutions hold diverse views due to a complex mix of sectoral, ideological, and cultural factors. Some see opportunities in China’s growing middle class, while others are deterred by concerns over governance and regulatory risks.

Consider Starbucks’ joint venture deal with Boyu Capital. On paper, it appears as though foreign investors ceded control to local partners. However, this arrangement represents a pragmatic acknowledgment that stable operations in China require collaboration with Chinese stakeholders. By giving up ownership, multinationals can ensure continuity and avoid unnecessary risks.

McDonald’s China is another example of this principle at work. A Citic-led consortium holds 52% stake while the brand retains 48%. This arrangement is not unusual; it’s simply a recognition that foreign investors need local partners to navigate complex regulatory environments. In both cases, the goal is not to relinquish control but to achieve operational stability.

Fang Fenglei’s comments suggest that this is precisely what investors are doing: making pragmatic decisions about how to operate in China rather than engaging in abstract debates about its “investibility.” If we dig deeper, it becomes clear that there are fundamental issues at play. The concept of “investibility” itself is a Western construct – an assumption that foreign investment should be encouraged and facilitated by host countries.

This raises questions about our own assumptions about globalization. Are we still trapped in the old paradigm where foreign investors dictate terms to local partners? Or are we recognizing the agency and autonomy of emerging markets like China?

Fang’s insights also raise questions about the future of global economic governance. As the US dollar continues its ascent, diversification from USD assets becomes increasingly attractive for investors. This could have significant implications for the stability of the global financial system.

Is it a sign that we’re moving towards a more multipolar world – or are we simply witnessing a temporary realignment? In any case, Fang Fenglei’s comments should be seen as a wake-up call: foreign investors are not passive observers in China’s economic landscape. They’re active participants who need to adapt to changing circumstances and navigate complex partnerships with local stakeholders.

As global trade wars and emerging market turbulence escalate, we would do well to remember that “investibility” is a myth – a product of our own biases and assumptions about globalization. It’s time to rethink the rules of the game and recognize the agency of emerging markets like China.

The implications for foreign investors are clear: no more hand-wringing over “debates” or worrying about the mythical “peak” of China’s economy. Instead, we need a new era of pragmatism – one where we acknowledge that investing in China requires collaboration with local partners and adapting to changing circumstances. Anything less is just playing catch-up in a rapidly shifting landscape.

Fang Fenglei’s insights should be seen as a call to action: it’s time to rethink our assumptions about globalization and recognize the agency of emerging markets like China. The future of global economic governance depends on it – and it starts with recognizing that “investibility” is nothing more than a myth.