Beijing goes on charm offensive
PRC's push for greater foreign investment clashes with its recent actions in a global business deal
Welcome back to What’s Happening in China, your weekly China brief.
I hope you’ve had a great week.
As part of an effort to reverse last year’s record foreign direct investment outflows and project itself as a responsible global power, the PRC put on a charm offensive this week. It hosted the China Development Forum in Beijing, where Vice Premier He Lifeng promised foreign business leaders greater market access; the Boao Forum for Asia in Hainan province, where Vice Premier Ding Xuexiang pledged stronger economic policy support and called for opposition to trade and investment protectionism; and finally, on Friday, Xi Jinping met with global executives, making a case for investing in the country by declaring, “Investing in China is investing in the future.”
It’s no coincidence that this same week, all Mintz employees detained since the March 2023 raid on its Beijing office were released after two years. The crackdown on consultancy and due diligence firms at the time sent a chilling message through the international business community, reinforcing the perception that doing business in the PRC was becoming increasingly risky.
Yet, these carefully staged events stand in stark contrast to Beijing’s recent interference in the Panama ports deal. Early reports suggested Xi was angered that Hong Kong’s CK Hutchison had agreed to sell its Panama ports to a BlackRock-led consortium without Beijing’s input. In response, Chinese authorities reportedly ordered state-owned companies to pause new deals with the Li Ka-shing family—which owns a controlling stake in the conglomerate—and, on Friday, announced that the deal signing was off, launching an antitrust probe into the sale.
Foreign investors should take note.
Let’s jump into it.
— PC
Through the Lens
In Focus
I. Xi to global executives: “uphold global order”
Chinese President Xi Jinping on Friday met with global executives and made a case for investing in the country, as Beijing focuses on reaching out to businesses amid escalating trade tensions with the U.S.
He said multinational companies had a big responsibility to “uphold global order” and that they needed to work hand in hand with China.
Xi emphasized that China was a safe and stable place for foreign companies. “To invest in China is to invest in tomorrow,” he said in Mandarin translated by CNBC.
Echoing recent policy plans, Xi said that China would ensure fair opportunities for foreign businesses to participate in government procurement bids.
More than 40 people, mostly foreign executives and business officials, attended the roundtable meeting with Xi, including Bridgewater Associates’ Ray Dalio, Standard Chartered CEO Bill Winters and Blackstone Group CEO Steve Schwartzman.
Read: China’s Xi calls on top executives to help 'uphold global order' as trade tensions with U.S. rise (CNBC)
Related:
China to pursue 'correct' path of globalisation as trade woes mount (HKFP)
Will China’s private economy promotion law reassure its private sector? (Brookings)
II. U.S. farmers: We’re not fine with these fines
A Trump administration proposal to impose stiff levies on Chinese-made ships entering US ports is sowing panic in the country’s agriculture industry, with farmers saying the added cost threatens to upend exports of wheat, corn and soyabeans.
The US Trade Representative has recommended imposing fees of up to $1.5mn per port call on ships built in China or operated by companies with Chinese-built vessels, and hearings on the matter are scheduled for this week.
Exporters said that they largely stopped receiving bids on their commodity shipments from freight operators and those that remained were “very, very highly priced”. The sudden inability to sell bulk products threatens to halt their businesses, they said. Bulk grain exporter United Grain Corporation said it had already seen a 40 per cent increase in freight costs, in a letter to US trade officials asking them to reconsider.
The entire sector was “caught off guard” by the proposal, said Jim Sutter, chief executive of the US Soybean Export Council. “It doesn’t seem fair to punish the farmers for [shipbuilders],” he said.
Retailers, port operators, dock workers and coal and lumber exporters have also warned that the proposed fees are upending their sectors. But few are poised to be harder-hit than the agricultural sector, which is already struggling.
Read: US farmers express dismay over proposal for levies on China-built ships (Financial Times)
Related: U.S. fines on Chinese freight ships threaten business (CNBC)
III. “Washington is already living in Beijing’s world.”
The U.S. strategy of engagement with China was based on the premise that, if the United States incorporated China into the global rules-based system, China would become more like the United States. For decades, Washington lectured Beijing about avoiding protectionism, eliminating barriers to foreign investment, and disciplining the use of subsidies and industrial policy—with only modest success. Still, the expectation was that integration would facilitate convergence.
There has indeed been a fair degree of convergence—just not in the way American policymakers predicted. Instead of China coming to resemble the United States, the United States is behaving more like China. Washington may have forged the open, liberal rules-based order, but China has defined its next phase: protectionism, subsidization, restrictions on foreign investment, and industrial policy. To argue that the United States must reassert its leadership to preserve the rules-based system it established is to miss the point. China’s nationalist state capitalism now dominates the international economic order. Washington is already living in Beijing’s world.
Read: China Has Already Remade the International System (Foreign Affairs)
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