How China is trying to attract Western investors

Apple CEO Tim Cook during his recent visit to Indonesia said that Apple will expand its presence in Indonesia. Cook, who met with Indonesian President Joko Widodo, said: “I think the investment capacity in Indonesia is endless. I think there are many interesting places to invest. And we invest. We believe in the country.

In recent years – in the wake of the trade wars between the two countries and then the Covid-19 pandemic – Apple, like several other American companies, has sought to relocate outside China. Southeast Asian countries – Vietnam and Malaysia – have been the top preferences for these companies, with India also starting to emerge as a potential destination.

The Biden administration introduced the Chips and Science Act, in 2022, to boost semiconductor manufacturing in the United States, and in October 2022 it introduced laws restricting the export of certain semiconductors to China (Biden's economic policies towards China, particularly in China). the technology field has been quite difficult). At a recent trilateral summit bringing together the leaders of the United States, Japan and the Philippines, the United States and Japan declared that they would invest in the semiconductor industry in the Philippines. The joint statement issued after the meeting also refers to a training program for Filipino students, with the aim of expanding the semiconductor workforce in the ASEAN country.

“We intend to pursue a new workforce development initiative in the semiconductor sector, through which students from the Philippines will receive world-class training at leading U.S. and Japanese universities, to to help secure our countries' semiconductor supply chains,” the statement said.

China tries to attract Western investors

Significantly, the Apple CEO met with Chinese President Xi Jinping in November 2023 – Cook was one of the guests at a dinner hosted by Xi on the sidelines of the APEC Forum in San Francisco. He also visited China in March 2024.

Xi, for his part, has reached out to Western investors and repeatedly warned against attempts at “decoupling” by the United States. During his meeting last month with American CEOs – who came to attend the China Development Forum – the Chinese president highlighted the reforms undertaken by China to attract foreign investors. He also said there is great potential for cooperation between the United States and China in several areas, including climate change and artificial intelligence.

The reforms undertaken by China were also highlighted at the Boao Forum (the Chinese version of the World Economic Forum). Addressing the Forum, Zhao Leiji, Chairman of the Standing Committee of the National People's Congress of China, said: “We sincerely invite all countries to board China's development express train and join forces to achieve global modernization characterized by peaceful development, mutually beneficial cooperation and common principles. prosperity,”
Why China needs to attract more FDI

Recent growth figures could provide a respite for China: Chinese GDP was 5.3% year-on-year in the first quarter of 2024, well above the estimated 4.9%. It is imperative for China to attract more FDI, and Beijing's overtures and efforts toward U.S. CEOs should be seen in this context.

It would be relevant that foreign investment in China saw a decline in early 2024 and a survey conducted by the American Chamber of Commerce in China (AmCham) – published in February 2024 highlighted the fact that even if the profitability of Western countries was rising in 2023, uncertainty reigned regarding expansion/new investments.

Can US-China relations be separated from bilateral relations?

America's CEOs are realizing that the economy cannot be divorced from the broader geopolitical relationship. According to the AmCham survey, one of the concerns of Western companies was the current state of bilateral relations between the United States and China. It would be pertinent to point out that although the engagement between Washington and Beijing is seen as a welcome step by American businesses, key differences on economic and strategic issues persist. During her visit to Beijing, US Treasury Secretary Yellen highlighted several US concerns. In addition to possible U.S. sanctions if China continues to provide assistance to Russia in the Russia-Ukraine conflict, the U.S. Treasury Secretary also urged Beijing to consider reviewing its unfair trade practices.

A possible Trump presidency could further aggravate tensions between Beijing and Washington. Trump has already warned he would impose tariffs on China if he wins the 2024 election. Earlier this week, US President Joe Biden called for tripling tariffs on steel and aluminum from China.

In conclusion, it is very unlikely that American CEOs will “disassociate” themselves from Beijing, as many American commentators and policymakers advocate. At the same time, they will exploit opportunities in other markets in Southeast Asian countries and India. US CEOs are reportedly closely monitoring developments in US domestic politics over the coming months as the 2024 US presidential elections approach.

Disclaimer: The opinions expressed in the article belong solely to the author.