China’s President Xi Jinping speaks at the “Senior Chinese Leader Event” held by the National Committee on US-China Relations and the US-China Business Council on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco, California, U.S., November 15, 2023.
Carlos Barria | Reuters
BEIJING — U.S. business leaders met with Chinese President Xi Jinping on Wednesday, the latest of Beijing’s efforts to bolster foreign investment in China amid tensions with the U.S.
Blackstone founder Stephen Schwarzman, Qualcomm President and CEO Cristiano Amon, Bloomberg Chair Mark Carney and FedEx President Rajesh Subramaniam were among the attendees, according to state media.
FedEx confirmed the meeting. The other companies did not respond to CNBC’s requests for comment.
Earlier reports described the meetings as a follow-up to Xi’s dinner with U.S. business executives in San Francisco in November following the Chinese president’s meeting with President Joe Biden.
The executives and others from major international companies were in Beijing this week for the annual China Development Forum (CDF), which took place Sunday to Monday.
Top executives of multinational companies typically attend the state-organized forum, which is billed as the “first major state-level international conference” after China’s annual parliamentary meetings in early March.
The forum this year coincided with other efforts to attract foreign business. Chinese authorities hosted an “Invest in China Summit” and formally eased once-stringent data export requirements.
The Cyberspace Administration of China late Friday formally released long-awaited new rules that eliminate government oversight of overseas information sharing if regulators haven’t categorized it as “important data.” Those rules were effective immediately.
What we have is businesses getting stuck in the middle, because the U.S. has been more involved in business than I can remember.
Carlos Gutierrez
former U.S. Secretary of Commerce
“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,” Sean Stein, chair of the American Chamber of Commerce in China, said 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 have made it more challenging for foreign businesses 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,” Carlos Gutierrez, former U.S. Secretary of Commerce, said Wednesday on CNBC’s “Squawk Box Asia.”
“We are in that period of time of confusion of different ideologies,” Gutierrez said. “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 running for reelection in November, has released incentives for boosting industrial development in the U.S. His administration has also used export controls to restrict U.S. companies from selling advanced semiconductor technology to China.
… foreign companies share the same lack of confidence and worries about an uncertain future that is felt amongst much of China’s domestic industry.
Scott Kennedy
Center for Strategic and International Studies
To help foreign businesses better navigate the China market, former SwissCham China executive director Peter Bachmann proposed the creation of a dedicated executive based at a company’s global headquarters.
“We have to deal now with two different levels. One is the business level, and one is the political one. Before it was just the business level,” said Bachmann, a long-time Shanghai resident and board member of the China Centre at the University of Applied Sciences and Arts Northwestern Switzerland (FHNW).
He said that makes the case for a so-called “Chief China Officer,” whose job includes helping the main office understand China better, and bridge the gap between the headquarters and the leadership team in China.
Looking for economic clarity
For businesses considering China investment plans, the country’s near-term growth outlook is another factor.
“The U.S. business delegation [at CDF] was substantially larger than last year, the conference organizers gave them a more visible platform, and they took advantage of that opportunity to speak up,” said 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 tried to send a clear signal that foreign businesses are welcome, but foreign companies share the same lack of confidence and worries about an uncertain future that is felt amongst much of China’s domestic industry,” Kennedy said.
The Chinese government announced at its parliamentary meeting this month the country would target growth of around 5%.
Several analysts have said such a goal is ambitious given the current levels of announced stimulus and the drag from the massive real estate sector. Top government officials signaled during the parliamentary meeting that Beijing could increase its support, but they did not elaborate.
The China Development Form this year “offered no new insights into the challenges China faces and any new policy remedies being considered,” said Stephen S. Roach, senior fellow at Yale Law School’s Paul Tsai China Center.
Instead, the forum focused more on what had already been shared at the parliamentary meeting earlier in the month, said Roach, who said he’s attended CDF every year except for the first one in 2000.
“To me it seemed more like a placeholder for the upcoming Party Third Plenum that could provide a stronger hint of any new reforms or policy strategy,” Roach said.
China’s ruling Communist Party typically holds a “Third Plenum” every five years to discuss longer-term aspects of the economy. The meeting has been widely anticipated since it was expected to take place late last year.
Non-U.S. foreign investment
Foreign direct investment in China in 2023 fell to a three-year low, according to official data. Since the easing of pandemic-era border controls early last year, China has doubled down on efforts to attract foreign capital.
The Ministry of Commerce and Beijing city held the first “Invest in China Summit” on Tuesday, and claimed about 140 business representatives attended.
“Investing in China is to invest in the future,” China’s Vice President Han Zheng declared in an opening speech, according to a CNBC translation of his Mandarin-language remarks. He emphasized China’s large market, industrial supply chain, and pointed out how China has worked on issues such as data exports and equal market treatment for foreign businesses.
While the U.S. and European businesses face greater geopolitical considerations when it comes to China operations, Middle Eastern capital has been eyeing the market.
“When it comes to opportunities for Aramco and China to join hands, the bottom line is that the sky is the limit!” Amin H. Nasser, president and CEO of the Saudi energy giant, said in a speech Tuesday at the Invest in China Summit.
He noted how Aramco and its chemicals subsidiary SABIC have made deals in the last year for more than $20 billion in chemicals investments in China. Nasser also said that venture capital is a “strategic area for collaboration,” and pointed out how Aramco in January more than doubled its funding for its VC arm to $7.5 billion.
Japanese companies are also looking for investment opportunities this year in China’s robotics, factory automation and car industry, Toyoki Oka, secretary general of the Japan-China Investment Promotion Agency, said on the sidelines of the summit. He said such investments would be for sales to China, and eventually exports to Southeast Asia.
— CNBC’s Eunice Yoon contributed to this report.