China's Xi meets with US CEOs in attempt to boost confidence in struggling economy

BEIJING Chinese President Xi Jinping met with senior U.S. leaders in Beijing on Wednesday, as his government tries to reassure foreign companies in a market that remains crucial to their bottom lines despite ongoing tensions between the world's two largest economies.

Xi met with the group of American businessmen and academics at the Great Hall of the People, Chinese state media reported. The meeting was preceded by a group photo.

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

During the meeting, Xi said China's economy was healthy and sustainable, an achievement that cannot be separated from international cooperation, according to state media, which reported listening attentively to U.S. participants.

The leaders were in China for a series of business-related events, including the China Development Forum, an annual high-level meeting that concluded Monday. Other high-profile U.S. business leaders, such as Apple CEO Tim Cook, have also visited China in recent days, as the U.S. government and businesses embark on a mutual charm offensive.

China is struggling to recover from three years of pandemic isolation, with its economic recovery weighed down by structural problems including a housing crisis, high local government debt, industrial overcapacity, lackluster consumption and youth unemployment , even though the economy managed to grow by 5.2%. rate last year.

The mood here is still quite gloomy when it comes to the economy, the trajectory of the country as a whole, China's place in the world, according to Scott Kennedy, senior advisor and chair of business and Chinese economies at the Center for Strategic and International Studies (CSIS). in Washington, said last week in an interview in Beijing.

There has been some economic recovery, but it has not translated into a more positive and optimistic sentiment among the population, he said.

Meanwhile, U.S. and foreign companies that still see big business potential in China have been alarmed by regulatory crackdowns, a new anti-espionage law, the use of exit bans, raids on consulting firms and due diligence, and other measures as part of Xi's national security campaign.

China's success over the past 40 years has been built on the private sector, as well as openness and collaboration with the West, Kennedy said. The perception that people have of the future is therefore very vague and ambiguous, and I think that this is what pushes consumers not to spend as much, companies not to invest as much and to create this general unease that the we meet them almost everywhere we go.

During a visit to China last year, Commerce Secretary Gina Raimondo said U.S. companies told her the country was no longer an investment because it was becoming too risky.

And one report published in February by the American Chamber of Commerce in China found that the main concerns of American businesses in the country were US-China relations as well as China's regulatory environment and rising costs.

Hopes rose in November when Xi and President Joe Biden held a summit in California, their first meeting in a year. During that trip, Xi also met with American business leaders at a dinner in San Francisco, where he received a standing ovation.

Among those attending the dinner was Apple CEO Cook, a frequent traveler to China who arrived for another high-profile visit last week.

Even if the company transfers part of its production to countries like IndiaCook stressed during the visit that Apple remains committed to China, a key overseas market for the company as well as a major manufacturing base.

For the first time last year, Apple was in China the largest smartphone supplier, with a market share of 17.3%. But the company is under intense pressure from domestic competitors such as Huawei, and iPhone sales are reportedly Fto one by 24% in the first six weeks of this year compared to a year earlier.

The use of iPhones in Chinese government agencies and state-owned companies has also reportedly been restricted for national security reasons, just as the Chinese app TikTok was banned on US government devices.

These are not the only challenges facing Apple, which was sued on Thursday by the US Department of Justice for its alleged monopolization of the smartphone market.

Earlier in the day, Cook was all smiles as he opened a new Apple store in downtown Shanghai, the company's 57th store in China and its second-largest flagship store in the world after the one on Fifth Avenue in New York .

Cook said he is very confident in the future of Apple's operations in China. I love being here. I love the people and the culture, he told reporters. And it's like every time I come here, I remember that everything is possible here.

Although Cook was mobbed by fans at the store's opening, where some people had lined up overnight, that doesn't necessarily translate into sales. The economic slowdown appears to be making Chinese consumers more price sensitive, increasing the appeal of cheaper smartphones from Huawei and other local rivals.

The iPhone is more expensive than other phones, so I think people will choose cheaper models, Shi Zhongnuo, 17, said in an interview Monday outside an Apple store in Beijing.

Cook also met with Commerce Minister Wang Wentao, who urged him to continue to unblock the Chinese market and achieve shared development with China, according to a ministry statement.

It was unclear whether Cook attended the meeting with Xi on Wednesday.

But China's courting of business executives is in part an attempt to revive interest from foreign companies. The country's foreign direct investment fell 19.9% ​​in the first two months of this year to 215.1 billion renminbi ($30 billion), the Commerce Ministry reported last week, after falling by 8% over one year in 2023.

There are still a large number of multinationals and American companies here, but China has basically lost its place at the very top of the list of countries where they target long-term strategic investments, said CSIS's Kennedy.

A Chinese regulatory official on Tuesday called the drop in foreign investment nothing unusual.

Volatility is completely normal when viewed from a global or Asian perspective, or when the trend is viewed over a longer period, Xu Zhibin, deputy director of China's foreign exchange regulator, said at the Boao Forum for Asia, an annual gathering in China. southern island province of Hainan, known as Asia's Davos.

Premier Li Qiang, China's second-largest official, told Cook and other global business leaders at the China Development Forum in Beijing on Sunday that China welcomes foreign investment and is taking steps to improve its business environment.

Vice Minister of Commerce Guo Tingting also said on Monday that foreign companies will be treated the same as Chinese companies so that they can invest in China with confidence and peace of mind.

Last week, Chinese authorities relaxed some rules on foreign investment as well as some security rules on cross-border data flow, an issue that worries foreign companies. Earlier this month, Beijing said it would make it easier for foreign investors to access the manufacturing sector.

Sean Stein, president of the American Chamber of Commerce in China, said that while such announcements are encouraging, the announcements do not move markets and the promises do not spur investment.

The key, as always, will be timely and comprehensive implementation, he said.

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