U.S. business leaders convened with Chinese President Xi Jinping on Wednesday, marking Beijing’s ongoing endeavors to enhance foreign investment in China amidst U.S. tensions.
According to state media, attendees included Blackstone founder Stephen Schwarzman, Qualcomm President and CEO Cristiano Amon, Bloomberg Chair Mark Carney, and FedEx President Rajesh Subramaniam.
The companies did not immediately respond to requests for comment. Earlier accounts portrayed the meetings as a continuation of Xi’s dinner with U.S. business figures in San Francisco last November, following his discussions with President Joe Biden.
These executives, alongside representatives from major international corporations, congregated in Beijing this week for the annual China Development Forum (CDF), held from Sunday to Monday.
Top executives of multinational companies traditionally participate in the state-orchestrated forum, touted as the “first major state-level international conference” following China’s annual parliamentary sessions in early March.
This year’s forum coincided with additional endeavors to attract foreign business. Chinese authorities convened an “Invest in China Summit” and formally relaxed previously stringent data export requirements.
On Friday, the Cyberspace Administration of China officially revealed long-awaited new regulations that eliminate government oversight of overseas information sharing unless regulators have classified it as “important data.” These regulations took immediate effect.
Given the increased involvement of the U.S. in commercial affairs, the evolving landscape places businesses in a quandary.
“This is a significant step forward in terms of transparency and our member companies now have much more clarity as they look to comply with these rules,” remarked Sean Stein, Chair of the American Chamber of Commerce in China, in a statement.
“Notably, these changes strengthen the role of industry-specific regulators to determine what data should be deemed important in their sectors,” he said, “and also presumes that data is not important unless specifically declared as such.”
However, a combination of geopolitical tensions, regulatory uncertainty, and slower economic growth has heightened the challenges for foreign businesses operating in China.
“What we have is businesses getting stuck in the middle, because the U.S. has been more involved in business than I can remember,” remarked Carlos Gutierrez, former U.S. Secretary of Commerce, during an appearance on CNBC’s “Squawk Box Asia” on Wednesday.
Gutierrez emphasized that U.S. businesses are likely to express a commitment to the Chinese market. “We are in that period of time of confusion of different ideologies,” he added.
“We will get through it. Nothing is permanent, and eventually, the numbers will show that globalization is a better model than self-sufficiency or nationalism. But regrettably, we are in that moment in time and will be in that for a while.”
Biden, who is seeking reelection in November, has introduced incentives aimed at bolstering industrial development in the U.S. His administration has also utilized export controls to limit U.S. companies from supplying advanced semiconductor technology to China.
“We have to address two different levels now: the business level and the political one. Previously, it was solely the business level,” remarked Bachmann, a longtime Shanghai resident and board member of the China Centre at the University of Applied Sciences and Arts Northwestern Switzerland (FHNW).
He suggested the need for a “Chief China Officer,” tasked with enhancing the main office’s understanding of China and bridging the gap between headquarters and the leadership team in China.
Seeking Economic Clarity
Understanding the country’s near-term growth prospects is crucial for businesses weighing investment plans in China.
“The U.S. business delegation [at CDF] was notably larger this year compared to last year, and the conference organizers provided them with a more prominent platform, which they utilized to express their views,” explained Scott Kennedy, Senior Advisor and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, D.C.
“The Chinese party-state attempted to convey a clear message that foreign businesses are embraced, yet foreign companies harbor similar concerns and uncertainties about the future as many of China’s domestic industries,” Kennedy added.
During its parliamentary meeting this month, the Chinese government announced a growth target of around 5%.
Several analysts have remarked that such a goal is ambitious considering the current levels of announced stimulus and the drag from the massive real estate sector. While top government officials hinted during the parliamentary meeting that Beijing might increase its support, they did not provide further details.
Stephen S. Roach, Senior Fellow at Yale Law School’s Paul Tsai China Center, noted that the China Development Forum this year “offered no new insights into the challenges China faces and any new policy remedies being considered.” Roach, who has attended CDF every year except for its inaugural one in 2000, observed that the forum primarily reiterated what had already been discussed at the parliamentary meeting earlier in the month.
“To me, it seemed more like a placeholder for the upcoming Party Third Plenum, which could potentially offer stronger indications of any new reforms or policy strategy,” Roach remarked.
China’s ruling Communist Party typically convenes a “Third Plenum” every five years to deliberate on longer-term aspects of the economy. The meeting has been eagerly anticipated since it was expected to take place late last year.
Non-U.S. foreign investment
Official data reveals that foreign direct investment in China in 2023 dropped to a three-year low. Since the relaxation of pandemic-era border controls early last year, China has intensified its efforts to attract foreign capital.
On Tuesday, the Ministry of Commerce and Beijing City co-hosted the inaugural “Invest in China Summit,” which reportedly saw the participation of around 140 business representatives.
“Investing in China is investing in the future,” declared China’s Vice President Han Zheng in his opening speech, as translated by CNBC from his Mandarin remarks. He underscored China’s vast market, and robust industrial supply chain, and highlighted the country’s efforts in areas such as data exports and providing equal market treatment for foreign enterprises.
While U.S. and European businesses grapple with heightened geopolitical considerations in their China operations, capital from the Middle East has shown interest in the market.
“When it comes to opportunities for Aramco and China to collaborate, the potential is limitless!” remarked Amin H. Nasser, President and CEO of the Saudi energy giant, during a speech at the Invest in China Summit on Tuesday.
He highlighted Aramco and its chemicals subsidiary SABIC’s significant deals in the past year, totaling over $20 billion in chemicals investments in China.
Nasser further emphasized the strategic importance of venture capital collaboration, noting that Aramco doubled its funding for its VC arm to $7.5 billion in January.
Toyoki Oka, Secretary General of the Japan-China Investment Promotion Agency, mentioned that Japanese companies are also seeking investment opportunities this year in China’s robotics, factory automation, and automotive industries.
He explained that these investments would be geared towards selling products in China and eventually exporting them to Southeast Asia.
