Ryan McMorrow/Demetri SEVASTOPOULO*
In one of the hotels in San Francisco, the President of the People’s Republic of China, Xi Jinping, addressed the representatives of the American business elite with a message that was received with thunderous applause: China is a huge market and a friend of the United States!
To meet the Chinese leader, the executive director of the company “Tesla” Elon Musk, the head of “Apple” Tim Cook and the head of “Pfizer” Albert Burla came to the “Hyatt Regency” hotel. They were interested in selling more electric cars, iPhones and pharmaceuticals in the country with the world’s second largest economy.
After the long-awaited talks with US President Joe Biden, Xi Jinping addressed the audience of three hundred people: “China is a super-big economy and a super-big market. Modernization for 1.4 billion Chinese people is a huge opportunity that China provides to the world.”
“The world needs the cooperation between China and the United States for a better future. China is ready to be a partner and friend of the United States,” he added.
And those warm feelings seemed to be mutual. “If you look at the list of the biggest American companies operating in China, they were all there,” said a representative of a San Francisco tech giant who attended the business elite meeting with Xi and spoke on condition of anonymity. And Bridgewater founder Ray Dalio, heading to the event at the Hyatt Hotel, noted that he was “very happy about this development of relations with Xi.”
The Chinese president tried to impress upon his listeners that his country is open to American business. But even so, tensions with Washington, China’s shaky post-pandemic economic recovery and increasingly aggressive actions by Beijing’s domestic security apparatus are dampening enthusiasm among U.S. investors who are wary of making big bets in China.
A number of US companies have already started “packing their bags” or restructuring their supply chains, fearing that geopolitical tensions could undermine their businesses. The country was left by such tech groups as Airbnb and Linkedin, as well as consulting firms Gallup and Forrester Research. Even Apple, which for a long time relied on Chinese production, began to look for a replacement.
India and Vietnam are being considered as alternatives
According to representatives of American companies, they did not expect that Xi Jinping’s talks with Joe Biden would lead to a final warming of relations between China and the United States. The heads of state agreed to resume dialogue between their armed forces and create a drug task force to address the flow of fentanyl into the United States. But they ended their meeting leaving many issues unresolved, first and foremost tensions over Taiwan, which China considers part of its territory.
Myron Brilliant, former head of the international relations department of the US Chamber of Commerce, emphasized that regardless of the usual tactics of Chinese officials, which they have again resorted to – attempts to win over the business community to ensure an inflow of investment into their country and to build ties with Washington – “times have changed”.
“The thing is, American businessmen don’t want to be drawn into
the chess game between China and the United States
“Companies are risk-averse, and the current strained relationship between Beijing and Washington threatens doing business in China,” explained Brilliant.
The increasingly active criticism of China by American “hawks” complicates the already difficult situation in which Western entrepreneurs found themselves. On Tuesday, Mike Gallagher, chairman of the House Select Committee on China, called it “shameless” that corporate executives paid to attend the dinner with Xi Jinping.
Darren Woods, head of ExxonMobil, which is currently building a multibillion-dollar petrochemical plant in southern China, told reporters he would not meet with Xi. “There will be ups and downs in the relationship between the two governments. But these two countries are very important to the global order and must always maintain a balance, even though that balance will change,” Woods said.
According to Shi Yinghun, a professor at the People’s University of China, the two governments’ focus on national security will put a sort of “ceiling” on their cooperation. “If economic interests come into conflict with national security, the latter will definitely be the priority,” Xi said.
The increasingly decisive actions of the Chinese internal security apparatus provoke
concern among foreign companies
In the offices of the American company Bain & Co, an action of the security services was carried out. And as a result of a legal review of the company Mintz, five employees were detained. Beijing has banned U.S. group Micron’s chips from being used in critical infrastructure because of cybersecurity risks.
At the meeting with business elites in San Francisco, Xi noted, “The number one question for us is: Are we enemies or partners?” He also warned that if China and the United States were perceived as adversaries, “this will only lead to ill-conceived policies, wrong actions and undesirable results”…
* British experts on Russia, China and the Middle East. As the Financial Times’ special correspondent for southern China, Sevastopoulos spent five years in Hong Kong, and for many years was the paper’s White House and Pentagon correspondent.