Amid an avalanche of foreign investment, Chinese leader Xi Jinping met with executives from dozens of multinational companies, including FedEx, Toyota and Samsung, at the Great Hall of the People in Beijing on Friday, touting the security of the Chinese market and the interests of foreign investment in China, while also demanding that foreign companies abide by Chinese laws and rules.
Xinhua News Agency reported that over 40 chairmen, CEOs, and representatives of business associations from foreign-invested enterprises attended the meeting. Among them were speeches by Raj Subramaniam, President of FedEx Express; Ola Källenius, Chairman of the Board of Management of Mercedes-Benz AG; Paul Hudson, CEO of Sanofi; Georges Elhedery, Chief Executive Officer of HSBC Holdings; Toshiaki Higashihara, Chairman of Hitachi Ltd.; Luzheng Kuo, President of SK Hynix; and Amin Nasser, President of Saudi Aramco. Xi Jinping then delivered a speech.
In his speech, Xi Jinping touted foreign investment as "an important participant in China's reform and opening up, as well as innovation and creation," and emphasized that "opening up to the outside world is China's basic national policy."
However, China's net foreign direct investment (FDI) fell by US$168 billion last year, with capital outflows reaching their largest scale since 1990. In 2024, foreign investment in China will be only US$4.5 billion, only 1.3% of the historical peak of US$344 billion in 2021.
Analysis: China incites nationalism, exacerbates conflicts, scares off foreign investment
"Although Xi Jinping repeatedly emphasized openness, equality and respect for the spirit of the law when meeting with foreign companies, this has not been implemented in practice. China should respect private enterprises and foreign investors, relax excessive restrictions on the market and respect market mechanisms, only then can the doubts of foreign investors be eliminated," Lai Rongwei, CEO of the Taiwan Inspirational Association, told this station.
He further emphasized that the crux of China's problems lies in its lack of the core spirit of market openness. China's current political interference in the market has led to a lack of respect for the market and a regression of the rule of law. A conflicting attitude toward foreign investors, the incitement of nationalism and hostility toward foreigners at home, and deteriorating international relations have led to a lack of confidence among foreign investors, and even to the frequent use of national security as a pretext to restrict the actions of foreign companies and foreigners. The current trend is "the stricter the regulation, the more people flee." To attract foreign investment back to China, China should move towards greater openness and human rights, establishing a stable and fair operating environment and legal safeguards.
Commentary: China's assurances to foreign companies are mostly lip service
One of the members who met with Xi, Stephen Orlins, chairman of the National Committee on U.S.-China Relations, told CNBC that the participating companies already have business operations in China. During the meeting, Xi Jinping commented on the content of each speaker's speech.
Regarding China's political uncertainty, which is of greatest concern to the outside world, Xi Jinping declared to foreign companies, "China has long maintained political and social stability and is recognized worldwide as one of the safest countries." He added, "China has always been, is now, and will always be an ideal, safe, and promising investment destination for foreign investors." He added, "To believe in China is to believe in tomorrow, and to invest in China is to invest in the future."
While emphasizing the investment environment, Xi Jinping also issued a warning, quoting the "Huainanzi: Qi Su Xun" and saying, "Those who enter a country should follow its customs, and those who enter a home should avoid its taboos." He stated that foreign capital should abide by Chinese laws, and hoped that multinational companies would "make rational voices, take pragmatic actions, resist all kinds of historical reversals, get rid of zero-sum games, and promote win-win cooperation." "I hope everyone will look far and wide, not be afraid of floating clouds blocking their view, and not blindly follow all kinds of behaviors that interfere with the global industrial chain game, security and stability... Some countries have built small courtyards with high walls and tariff barriers, politicized, instrumentalized, weaponized, and generalized security of economic and trade issues, forcing companies to take sides and make choices that violate economic laws. This is not in line with market rules and the general trend of opening up." He implied that foreign capital should break away from the US rules of the game and continue to penetrate the Chinese market.
Ye Yaoyuan, professor of international studies at the University of St. Thomas in the United States, told this station that China is neither a society ruled by law nor an open market. China's commitments to foreign investors are merely verbal, subject to frequent changes, and lack institutional safeguards. Even if foreign companies cooperate with state-owned enterprises, they face difficulties in obtaining substantive security and benefits.
He warned, "Without true market opening and legal reforms, risks for foreign investors will remain. Furthermore, the CCP has had numerous cases of plundering companies in the past, causing foreign investors to lose trust in China. The Chinese government used to attract foreign investment by offering empty promises, but after 30 years of experience and lessons learned, this argument is no longer believed."
Xi Jinping advocates globalization, but China only exports to the world in one direction and does not open its market to the world in a reciprocal manner.
On the eve of US President Trump's implementation of "reciprocal tariffs" on April 2, Xi Jinping said to foreign companies with a pointed look, "Multilateralism is the inevitable choice for solving the difficult challenges facing the world, and economic globalization is an unstoppable historical trend." Xi Jinping also asked foreign companies to jointly maintain the multilateral trading system, the stability of the global industrial chain and supply chain, and the international environment of openness and cooperation.
Ye Yaoyuan warned foreign companies considering investing in China that, despite emphasizing multilateralism and embracing globalization, China has not yet truly opened its market to the public on an equal footing. China only wants its products to be exported worldwide, yet it places numerous restrictions on importing foreign products. "This cannot be called globalization, but rather self-interest, and is essentially a form of unilateralism."
He analyzed that although China remains the world's second-largest consumer market, some foreign companies still hope to gain a foothold in the Chinese market, hoping to profit. However, this also carries the risk of technology theft. While this may yield short-term profits, the company's long-term interests may be harmed. Furthermore, investing in China carries significant national security and personal safety risks. Ye Yaoyuan believes that "companies that prioritize long-term development will choose to avoid the Chinese market."
Lai Rongwei noted that the US is about to impose tariffs on Chinese companies. While some foreign companies still rely on the Chinese consumer market, which has "inertia," are still relying on it, China has entered a period of deflation, with a significant decline in consumer spending power, and the incentives of the Chinese market are gradually dwindling. Conversely, rising political risks are making companies more cautious. "More and more large companies are turning to markets outside of China. While a complete decoupling won't happen in the short term, a shift in approach is underway."
The New York Times noted that strained Sino-US relations have caused American companies to adopt a cautious approach to new investments in China. China's continued tightening of national security laws has also caused deep concerns among many foreign businesses. For example, five Chinese employees of Mintz Group, a US business consulting firm that previously provided investigation and due diligence services to companies, were released this week after two years of detention. The firm, which previously provided research and due diligence services to companies, has largely withdrawn from the Chinese market, making it difficult for multinational companies to obtain the necessary regulatory, environmental, and political risk assessments before investing.
Other Chinese officials attending the meeting included Cai Qi, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, Chinese Foreign Minister Wang Yi, and Chinese Vice Premier He Lifeng.
