China's Xi meets with US executives as companies navigate bilateral tensions

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

Black stone founder stephen schwarzman, Qualcomm President and CEO Cristiano Amon and Bloomberg Chairman Mark Carney and fedex State media reported that President Rajesh Subramaniam was among those attending.

FedEx confirmed the meeting. The other companies did not respond to CNBC's requests for comment.

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

CEOs and other major global companies were in Beijing this week to attend the annual China Development Forum, which was held from Sunday to Monday.

Top executives of multinational companies usually attend the state-organized forum, which is described as “the first major state-level international conference” after China's annual parliamentary meetings in early March.

This year's forum coincided with other efforts to attract foreign business. Chinese authorities hosted the China Investment Summit and officially relaxed previously strict data export requirements.

The Cyberspace Administration of China late Friday officially issued long-awaited new rules that eliminate government censorship of information sharing abroad if regulators do not classify it as “important data.” These rules were effective immediately.

“This is an important step forward in terms of transparency, and our member companies now have more clarity as they look to comply with these rules,” Sean Stein, president of the American Chamber of Commerce in China, said in a statement.

“It is worth noting that these changes strengthen the role of industry-specific regulators to determine what data should be considered important in their sectors, and also assume that data is not important unless it is specifically declared as such,” he said.

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

“What we have is companies are stuck in the middle, because the United States has been more involved in business than I can remember,” Carlos Gutierrez, a former U.S. Commerce Secretary, said Wednesday on CNBC's “Squawk Box Asia.”

“We are in this period of confusion between different ideologies,” Gutierrez said. “We will get through this. Nothing is permanent, and eventually the numbers will show that globalization is a better model than autarky or nationalism. But unfortunately we are at that moment in time, and we will remain there for a while.”

Biden, who is running for re-election in November, has issued incentives to boost industrial development in the United States. His administration has also used export controls to restrict American companies from selling advanced semiconductor technology to China.

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

“We now have to deal with two different levels. One is the business level, the other is the political level. Before that it was just the business level,” said Bachmann, a long-time resident of Shanghai and a board member of the China Centre. University of Applied Sciences and Arts North-West Switzerland (FHNW).

He said this justifies the appointment of a so-called “Chief China Officer”, whose job includes helping the head office understand China better, and bridging the gap between the headquarters and the leadership team in China.

For companies considering investment plans in China, the country's near-term growth prospects are another factor.

“The U.S. business delegation (at CDF) was much larger than last year, and conference organizers gave them a clearer platform, and they used that opportunity to speak,” said Scott Kennedy, senior advisor and chairman of the China Business Board of Trustees. and Economics at the Center for Strategic and International Studies in Washington, DC

“The Chinese party-state has tried to send a clear signal that foreign companies are welcome, but foreign companies share the same mistrust and fears about an uncertain future that a large portion of China's domestic industry feels,” Kennedy said.

The Chinese government announced at its parliamentary meeting this month that the country will target growth of about 5%.

Many analysts said such a target was ambitious given the current levels of announced stimulus and the resulting pressure from the huge real estate sector. Senior government officials indicated during the parliamentary meeting that Beijing may increase its support, but did not provide details.

Stephen S. said: China's development model this year “has not provided new insights into the challenges China faces and any new policy remedies being considered,” said Roach, a senior fellow at the Paul Tsai China Center at Yale Law School.

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

“To me it seemed like a placeholder for the party's upcoming third plenum which could provide a stronger hint for any new reforms or political strategy,” Roach said.

China's ruling Communist Party usually holds a “third plenum” every five years to discuss longer-term economic aspects. The meeting was widely anticipated because it was expected to take place late last year.

Foreign direct investment in China in 2023 fell to its lowest level in three years, according to official data. Since easing pandemic-era border controls early last year, China has redoubled its efforts to attract foreign capital.

The Ministry of Commerce and the City of Beijing held the first “China Investment Summit” on Tuesday, attended by about 140 business representatives.

Chinese Vice President Han Zheng declared in his opening remarks that “investing in China is investing in the future,” according to a CNBC translation of his Mandarin remarks. He stressed China's large market and industrial supply chain, and pointed out how China is working on issues such as data exports and equal market treatment of foreign companies.

While US and European companies face greater geopolitical considerations when it comes to operations in China, Middle Eastern capital is eyeing the market.

“When it comes to cooperation opportunities between Aramco and China, the bottom line is that the sky is the limit!” Amin Nasser, president and CEO of the Saudi energy giant, said in a speech Tuesday at the China Investment Summit.

He pointed to how Aramco and its chemical subsidiary SABIC concluded deals last year for chemicals investments worth more than $20 billion in China. Nasser also said venture capital is a “strategic area of ​​cooperation,” and noted how Aramco in January doubled its funding for its venture capital arm to $7.5 billion.

Toyuki Oka, Secretary-General of the Japan-China Investment Promotion Agency, said on the sidelines of the summit that Japanese companies are also looking for investment opportunities this year in the field of robotics, factory automation and the automobile industry in China. He said such investments would be for sales to China and eventually export to Southeast Asia.

— CNBC's Eunice Yuen contributed to this report.