Shanghai has stepped up efforts to attract foreign investment as some multinational companies are considering to move out of the country, and the tariffs in the escalating U.S.-China trade war render manufacturing uncompetitive. Shanghai Mayor Ying Yong said that the city will further cut red tape, including reducing the time taken for a new company to complete business registration, obtain a manufacturing license and gain access to electricity, soothing concerns about potential retaliatory measures against foreign companies operating in the country.

“Whatever the economic situation we will face, the door for foreign businesses will not be closed,” Ying told a press conference after the annual International Business Leaders’ Advisory Council (BLAC) meeting. “Instead, we will further open it for them.” His remarks came after American and European businesses operating in China said they had fallen victim to the trade tensions between the world’s two largest economies. In September, some 7% of corporate respondents in a survey by the European Union Chamber of Commerce in China said they had either moved or were planning to move their production out to dodge the additional tariffs levied on key parts imported from the U.S. used for manufacturing goods in China.

In another survey also conducted in September by the American Chamber of Commerce in China, nearly 50% of the 430 U.S. companies polled, said they were expecting a “strong negative impact” from the tariffs. Foreign direct investment (FDI) has been one of the key driving forces of Shanghai’s economic growth over the past two decades, contributing nearly 30% to local GDP. “For a developed metropolis like Shanghai, the loss of foreign investment will lead to massive job losses, reduced local economic output and diminish its role as the country’s economic locomotive,” said Yin Ran, a Shanghai-based angel investor. Foreign investment in Shanghai grew 2.1% year-on-year during the first nine months of 2018, topping USD12.9 billion, Mayor Ying told reporters. But a reporting mechanism to show the withdrawal of foreign funds is lacking, the South China Morning Post reports.

Twelve major foreign-funded projects will soon get underway in Shanghai. Data center solution provider
GDS, SAIC General Motors, and German commercial vehicle supplier SAF-Holland are among a list of companies pledging a total investment of CNY23.4 billion in Shanghai. The largest proposed investment comes from Nio, an electric vehicle startup that promises a fresh injection of CNY16.6 billion in the research and development (R&D) of electric, smart, internet-connected and lightweight cars. French sporting goods retailer Decathlon is scheduled to set up a sports equipment headquarters in Shanghai with an estimated investment of CNY1 billion, and Japanese pharmaceutical company Takeda plans to add CNY809 million to its Shanghai operation and is on course to introduce seven new medicines to the Chinese market over the next five years. Swiss industrial conglomerate ABB Group said it will invest USD150 million to build its “largest and most advanced” factory in Shanghai. Production is expected to begin by the end of 2020 and annual capacity will be around 100,000 robots, one-quarter of ABB’s global demand last year, said CEO Ulrich Spiesshofer during his sixth visit to China this year. He identified Shanghai as a “vital center for advanced technology leadership for ABB and the world”. The new 60,000-square-meter plant will feature cutting-edge technologies such as machine learning, enabling it to manufacture a wide range of industrial robots.

“The waves of investment show that Shanghai has become a critical hub for multinational corporations and an engine of growth. Their longterm optimism about investing in Shanghai remains unchanged,” said Shang Yuying, Director of the Shanghai Commerce Commission, as reported by the China Daily.