Xi Jinping meets US leaders as businesses navigate bilateral tensions

BEIJING — U.S. business leaders met with Chinese President Xi Jinping on Wednesday, Beijing’s latest effort to bolster foreign investment in China amid tensions with the United States.

Black stone founder Stephen Schwarzman, Qualcomm President and CEO Cristiano Amon, Bloomberg Chairman Mark Carney and FedEx President Rajesh Subramaniam was among those present, according to state media.

The companies did not immediately respond to CNBC’s requests for comment.

Previous reports described the meetings as a follow-up to Xi Jinping’s dinner with US business leaders in San Francisco in November following the Chinese president’s meeting with President Joe Biden.

CEOs and representatives of major international companies were in Beijing this week for the annual China Development Forum (CDF), which ran from Sunday to Monday.

Top executives from multinational companies routinely attend the state-sponsored forum, which is touted as the “first major state-level international conference” since China’s annual parliamentary sessions in early March.

This year’s forum coincides with other efforts to attract foreign business. Chinese authorities held a “China Investment Summit” and officially relaxed their once-strict data export requirements.

The Cyberspace Administration of China late Friday evening officially released long-awaited new rules which eliminate government oversight of the sharing of information abroad unless regulators classify it as “sensitive data.” These rules took effect immediately.

“This is a significant step forward in terms of transparency, and our member companies now have much greater clarity as they strive to comply with these rules,” Sean Stein, chairman of the American Chamber of Commerce in China, said in a statement.

“Notably, these changes strengthen the role of industry regulators in determining what data should be considered important in their sectors,” he said, “and also suggest that data is not important unless specifically stated as such.”

However, a combination of geopolitical tensions, regulatory uncertainty and slowing economic growth has made it difficult for foreign businesses to operate in China.

“We’re dealing with business being stuck in the middle because the U.S. has been involved in business more than I can remember,” Carlos Gutierrez, the former U.S. Commerce Secretary, said on CNBC’s “Squawk Box Asia” on Wednesday.

“We are going through a period of mixing different ideologies,” Gutierrez said. “We’ll get through this. Nothing lasts forever, and eventually the numbers will show that globalization is a better model than self-sufficiency or nationalism. But unfortunately, we are at this point in time and will be for a while.”

Biden, who is running for re-election in November, has unveiled incentives to boost industrial development in the US. His administration also used export controls to restrict U.S. companies from selling advanced semiconductor technologies to China.

To help foreign companies better navigate the Chinese market, former SwissCham China chief executive Peter Bachmann proposed creating a dedicated head position at the company’s global headquarters.

“Right now we have to deal with two different levels. One is the business level and the other is the political level. Previously, it was just a business level,” said Bachmann, a longtime Shanghai resident and board member of the China Center at the University of Applied Sciences and Arts of Northwestern Switzerland (FHNW).

He said that this gives grounds for the so-called “Chief Director for China“, whose work includes helping headquarters better understand China and bridging the gap between headquarters and the leadership team in China.

For businesses considering investment plans in China, the country’s short-term growth prospects are another factor.

“US Business Delegation [at CDF] was significantly larger than last year, the conference organizers gave them a more visible platform, and they took this opportunity to speak out,” said Scott Kennedy, senior advisor and trustee of Chinese business and economics at the Center for Strategic and International Studies. Research in Washington, DC

“The Chinese Party-state has tried to send a clear message that foreign business is welcome, but foreign companies share the same uncertainty and anxiety about an uncertain future that is felt among much of China’s domestic industry,” Kennedy said.

The Chinese government announced at its parliamentary meeting this month that the country would target economic growth of around 5%.

Some analysts said such a goal is ambitious given current levels of announced stimulus and resistance from the huge real estate sector. During the parliamentary meeting, senior government officials signaled that Beijing could increase its support, but did not elaborate.

The shape of China’s development this year “has not offered new insights into the challenges China faces or any new policies that are being considered,” said Stephen S. Roach, a senior fellow at Yale Law School’s Paul Tsai China Center.

Instead, the forum focused more on what was already discussed at the parliamentary meeting earlier this month, said Roach, who said he has attended the CDF every year except for the first one in 2000.

“It seemed to me more like a substitute for the party’s upcoming third plenum, which could provide a stronger hint at any new reforms or political strategy,” Roach said.

China’s ruling Communist Party typically holds a “Third Plenum” every five years to discuss long-term aspects of the economy. Many people were waiting for this meeting, since it was supposed to take place at the end of last year.

Foreign direct investment in China fell to a three-year low in 2023, according to official data. After easing pandemic-era border controls early last year, China has redoubled efforts to attract foreign capital.

The Ministry of Commerce and the city of Beijing held the first “Invest in China Summit” on Tuesday, which was attended by about 140 business representatives.

“Investing in China is investing in the future,” Chinese Vice President Han Zheng said in his opening speech, according to a CNBC translation of his speech in Mandarin. He highlighted China’s large market, industrial supply chain and noted how China is working on issues such as data exports and equal market treatment for foreign businesses.

As American and European businesses face greater geopolitical considerations when it comes to operations in China, Middle Eastern capital is eyeing the market.

“When it comes to the possibilities of Aramco and China joining forces, 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 on Tuesday at the Invest in China summit.

He noted that Aramco and its chemicals subsidiary SABIC entered into deals last year to invest more than $20 billion in chemicals in China. Nasser also said venture capital was a “strategic area of ​​cooperation” and noted that Aramco in January more than doubled the funding of its venture capital arm to $7.5 billion.

Japanese companies are also looking for investment opportunities in Chinese robotics, factory automation and the auto industry this year, 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.