Xi Jinping Meets US Business Leaders Amid China-US Tensions

According to state media, Xi declared that the Chinese economy was “healthy and sustainable,” noting that this accomplishment “cannot be separated from international cooperation.”

TFD – Dive into the recent meeting between Chinese President Xi Jinping and US business leaders as they navigate China-US tensions and economic dynamics, including Apple’s role in the Chinese market.

Beijing: Despite ongoing tensions between the two largest economies in the world, Chinese President Xi Jinping met with senior U.S. businessmen in Beijing on Wednesday. This was part of his government’s efforts to reassure foreign firms about a market that is still vital to their bottom lines.

Chinese official media said that Xi met the delegation of American academics and businessmen at the Great Hall of the People. There was a group photo taken before to the gathering.

Participants included Blackstone founder Stephen Schwarzman, Bloomberg Chair Mark Carney, FedEx President Rajesh Subramaniam and Qualcomm President and CEO Cristiano Amon, according to state media reports.

As per official media, Xi “listened carefully” to the American participants during the meeting and declared that the Chinese economy was “healthy and sustainable,” an accomplishment that “cannot be separated from international cooperation.”

The executives were in China for a series of business-related events, including the China Development Forum, an annual high-level meeting that ended Monday. Other prominent U.S. business leaders, such as Apple CEO Tim Cook, have also been in China in recent days as the government and American companies engage in a mutual charm offensive.

Despite managing a 5.2% growth rate last year, structural issues such as a real estate crisis, high local government debt, industrial overcapacity, lackluster consumption, and youth unemployment have hindered China’s economic recovery after three years of pandemic isolation.

In an interview last week in Beijing, Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies, CSIS, in Washington, stated, “The mood here is still pretty dark — about the economy, about the trajectory of the country overall, about China’s place in the world.”

He stated, “There has been some economic recovery, but it hasn’t resulted in people feeling more upbeat and hopeful.”

U.S. and other foreign companies who still see the potential for big business in China, meanwhile, have been alarmed by regulatory crackdowns, a new anti-espionage law, the use of exit bans, raids on consulting and due diligence firms, and other measures amid Xi’s national security drive.

Kennedy stated, “The private sector, as well as openness and cooperation with the West, have been the cornerstones of China’s success over the last 40 years.” “And so people’s sense of the future is very unclear and ambiguous, and I think that’s what’s leading consumers to not spend as much, companies not to invest as much and for there to be this general malaise that you encounter just about everywhere you go.”

Commerce Secretary Gina Raimondo stated that American businesses had informed her that China was “uninvestable because it’s become too risky” while she was in the nation last year.

Furthermore, according to a February report by the American Chamber of Commerce in China, growing expenses, China’s regulatory environment, and U.S.-Sino relations were the top concerns of American businesses operating in the nation.

As Xi and President Joe Biden convened in California in November for their first meeting in a year, expectations were high. Xi met with American business executives during the trip at a banquet in San Francisco, where he was hailed with a standing ovation.

Apple CEO Cook, who visits China frequently, was present at the dinner. Last week, Cook visited for yet another high-profile visit.

Even as the company shifts some production to countries such as India, Cook emphasized on this visit that Apple is still committed to China, a key overseas market for the company, as well as a major manufacturing base.

With a 17.3% market share, Apple became the biggest smartphone provider in China for the first time last year. However, domestic rivals like Huawei are putting a lot of pressure on the corporation, and according to reports, iPhone sales dropped by 24% in the first half of this year compared to the same period last year.

Similar to how the Chinese app TikTok has been prohibited from being used on U.S. government devices, there have apparently been restrictions on the usage of iPhones in Chinese government agencies and state-owned businesses due to national security concerns.

These aren’t the only issues Apple is dealing with; on Thursday, the US Justice Department filed a lawsuit against the company for allegedly controlling the majority of the smartphone industry.

Cook was beaming earlier that day when he unveiled a brand-new Apple shop in Shanghai’s downtown, the company’s 57th facility in China and its second-largest flagship globally, behind its Fifth Avenue location in New York.

Cook expressed his “extreme confidence” in Apple’s China operations going forward. “I adore being in this place. He told reporters, “I adore the people and the culture. And I feel like I’m reminded of this every time I visit—anything is possible here.”

While some customers had waited all night to get in line, Cook was surrounded by fans when the store opened, but this did not always result in sales. Chinese consumers seem to be growing more price conscious as a result of the economic slump, which makes Huawei and other regional competitors’ less expensive smartphones more alluring.

In an interview conducted on Monday outside of an Apple store in Beijing, Shi Zhongnuo, 17, stated, “I think people will choose cheaper ones because the iPhone is more expensive than other phones.”

In a statement from the ministry, it was stated that Cook also met with Wang Wentao, the minister of commerce, who pushed him to “continue to unlock the Chinese market and achieve shared development with China.”

It was unclear if Cook showed up for the Wednesday meeting with Xi.

Part of China’s executive outreach is an attempt to rekindle international corporate interest. Foreign direct investment in the nation decreased 8% year over year in 2023, but it plunged 19.9% in the first two months of this year to 215.1 billion renminbi ($30 billion), according to a report released last week by the Commerce Ministry.

According to Kennedy of CSIS, “there are still a ton of multinational corporations and American businesses here, but China has essentially lost its position at the top of the list where they are targeting strategic investment long term.”

On Tuesday, a Chinese regulatory official brushed off the decline in foreign investment as normal.

At the Boao Forum for Asia, an annual gathering in China’s southern island province of Hainan known as the “Asian Davos,” Xu Zhibin, the deputy head of the country’s foreign exchange regulator, stated that “the volatility is quite normal when viewed from a global or Asian perspective or when the trend is viewed on a longer timeline.”

At the China Development Forum in Beijing on Sunday, Premier Li Qiang, China’s second-ranking official, informed Cook and other international business executives that China welcomed foreign investment and was working to enhance the country’s economic environment.

Guo Tingting, vice minister of commerce, added on Monday that international businesses would receive the same treatment as domestic ones so they “may invest in China with confidence and peace of mind.”

Chinese officials loosened several security regulations on cross-border data flow last week, which alarmed international businesses. They also relaxed other restrictions on foreign investment. Beijing announced last month that it would facilitate foreign investors’ entry to the industrial sector.

Although these pronouncements are welcome, according to Sean Stein, chair of the American Chamber of Commerce in China, “announcements don’t move markets and promises don’t drive investment.”

“As always, timely and complete implementation will be crucial,” he stated.

Jennifer Jett reported from Hong Kong, and Janis Mackey Frayer from Beijing.