China’s Xi meets U.S. executives as businesses navigate bilateral tensions

U.S. Business Leaders met with Chinese President Xi Jinping Wednesday. This was the latest in Beijing’s efforts at boosting foreign investment in China, amid tensions between the U.S.

CNBC’s request for comments was not immediately answered by the companies.

Earlier reports described these meetings as a continuation of Xi’s November dinner with U.S. executives in San Francisco following his meeting with President Joe Biden.

This week, the China Development Forum (CDF) was held in Beijing. It took place from Sunday to Monday.

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The forum is usually attended by top executives from multinational companies. It’s billed as “the first major state-level conference” following China’s annual parliament meetings, which took place in early March.

This year’s forum coincided with efforts to attract foreign businesses. The Chinese authorities held an “Invest In China Summit” to ease the once strict data export restrictions.

Cyberspace Administration of China released new rules late Friday that will eliminate government oversight of information sharing overseas if it is not classified as “important data” by regulators. These rules are effective immediately.

Sean Stein, chairman of the American Chamber of Commerce in China said in a press release that this is a major step forward in transparency. Our member companies have now much more clarity in their efforts to comply with these regulations.

He said that these changes “strengthen the role of specific industry regulators in determining what data is important to their sector” and “presumes data are not important until they are explicitly declared as such”.

Foreign businesses have found it difficult to do business in China due to a combination geopolitical tensions and regulatory uncertainty, as well as a slower economic growth.

Carlos Gutierrez said on CNBC’s “SquawkBox Asia” that the U.S. is more involved in the business world than I can recall.

Gutierrez stated, “We are currently in a period of confusion between different ideologies.” We will make it through. There is no permanent solution and the numbers will eventually show that globalization works better than nationalism or self-sufficiency. “But regrettably, we are at that point in time now and will remain there for some time.”

Biden is running for re-election in November and has announced incentives to boost industrial development in the U.S.

Peter Bachmann, the former SwissCham China executive Director, proposed that a dedicated executive be based in the global headquarters of the company to help foreign companies better navigate the China Market.

“We are now dealing with two levels. The first is the business-level, the second is the political level. Bachmann, a Shanghai resident and member of the board of the University of Applied Sciences and Arts Northwestern Switzerland’s (FHNW) China Centre, said that before it was only the business level.

He said this makes the case for the creation of a “Chief China officer” whose role is to help the headquarters understand China and bridge the gap with the leadership team in China.

Seeking economic clarity

The near-term outlook for China’s growth is also important to businesses looking at China as a potential investment destination.

Scott Kennedy, senior adviser and trustee chair for Chinese business and economy at the Center for Strategic and International Studies, Washington, D.C., said that the U.S. delegation was significantly larger this year than it was last year. The conference organizers also gave them an opportunity to speak out.

Kennedy stated that “the Chinese Party-State tried to send a message that foreign businesses were welcome. However, foreign companies also share the same lack confidence and worry about an uncertain future as is felt by much of China’s industry.”

At its meeting of the Chinese Parliament this month, the Chinese government announced that it would aim for a growth rate of around 5%.

Analysts have said that such a target is too ambitious, given the level of stimulus announced and the drag caused by the real estate industry. Top government officials indicated during the parliamentary session that Beijing may increase its support. However, they did not provide any further details.

Stephen S. Roach of the Paul Tsai China Center at Yale Law School, a senior fellow, said that this year’s China Development Form “offered no fresh insights into China’s challenges and any new policy solutions being considered.”

Roach, a CDF attendee who has attended every CDF except the first in 2000, says that the focus of the forum was on the information already shared during the parliamentary session earlier in the month.

Roach stated that “to me, it appeared more like a placeholder to the upcoming Party Third Plenum which could provide a stronger indication of any new policy or reform strategy.”

Every five years, the ruling Communist Party of China holds a “Third Plenum” to discuss aspects of economic policy that are more long-term. This meeting was widely anticipated as it was scheduled to occur late last year.

Non-U.S. foreign investment

Official data show that foreign direct investment in China fell to its lowest level in three years in 2023. China has increased its efforts to attract foreign investment since the early-year easing of border controls during pandemic era.

On Tuesday, the Ministry of Commerce in Beijing and Beijing City held their first “Invest In China Summit”, and around 140 business representatives were said to have attended.

According to CNBC’s translation of Han Zheng’s Mandarin-language remarks, “Investing is China means investing in the future.” Han Zheng emphasized China’s industrial supply chain and its large market. He also highlighted how China worked on data exports, equal market treatment, and other issues.

Middle Eastern investors have been looking at the China market, while U.S. and European companies are more concerned with geopolitical factors when it comes China operations.

Amin H.Nasser, President and CEO of Saudi Arabia’s energy giant Aramco, stated in a speech at the Invest in China Summit on Tuesday that “the sky is the limit” when it comes to the opportunities for Aramco to work with China.

He pointed out that Aramco, through its subsidiary SABIC, has made more than $20 billion worth of chemicals investments in China in the past year. Nasser said venture capital was a “strategic collaboration area” and that Aramco had more than doubled the funding it provided for its ventures in January.