American business elite welcome Xi Jinping with standing ovation

At a San Francisco hotel Wednesday night, Chinese President Xi Jinping delivered a message to American business that drew a standing ovation: China is a big market and a friend.

At the Hyatt Regency to meet the Chinese leader were Tesla’s Elon Musk, Apple’s Tim Cook and Pfizer’s Albert Bourla, all eager to sell more electric cars, iPhones and pharmaceuticals in the world’s second-largest economy.

After a day spent in long-awaited talks with US President Joe Biden, Xi told an audience of about 300 people: “China is both a super-big economy and a super-big market … modernization for 1.4 billion Chinese is a huge opportunity that China presents to the world.”

“The world needs China and the United States to work together for a better future,” he added. “China is ready to be a partner and friend of the United States.”

The warm feelings seemed mutual. “If you go through the list of the top 20 American companies in China, they were all there,” said a San Francisco tech titan who attended the event but did not want his name published. Heading into the Hyatt, Bridgewater founder Ray Dalio told the Financial Times he was “excited to have this relationship [with Xi]”.

But while Xi made efforts to express his country’s open welcome to American business, a combination of simmering tensions with Washington, a rock-solid economic recovery from the pandemic and Beijing’s increasingly assertive domestic security apparatus have dampened enthusiasm among American investors for making big bets on China.

Chinese President Xi Jinping meets with American business leaders

A number of US companies have started packing their bags or rerouting supply chains for fear that geopolitical tensions could disrupt business. Technology groups such as Airbnb and Linkedin have withdrawn from the country, as have the consulting firms Gallup and Forrester Research. Even Apple, which has long relied on Chinese manufacturing, has begun sourcing orders from countries such as India and Vietnam.

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Business leaders and analysts said they did not expect Xi’s summit with Biden to thaw relations completely. The two presidents agreed to restart military communications and set up an anti-narcotics task force to tackle fentanyl flowing into the US, but they left with a number of unresolved issues, particularly tensions over Taiwan, which China claims as part of of its territory.

Myron Brilliant, former head of international relations for the US Chamber of Commerce, said while Chinese officials returned to the playbook of courting business for investment and to help manage relations with Washington, “times have changed”.

“The bottom line is that American business leaders do not want to be caught in a game of chess between China and the American governments,” Brilliant said. “CEOs are risk takers[and]the environment between China and the United States has increased the risk of doing business in China.”

Increasingly vocal criticism of China from hawkish US politicians has further complicated a fraught environment for business leaders. Mike Gallagher, chairman of the House China Committee, called it “unconscionable” on Tuesday that US leaders paid to attend the dinner with Xi, citing Beijing’s crackdown on Muslim Uighurs in China’s northwestern Xinjiang region and demanding a list of attendees.

A Chinese-American executive at a technology company that spans both countries told the FT that his participation was a “state secret”.

Joe Biden, right, and Xi Jinping
US President Joe Biden, right, and Chinese President Xi Jinping met at the Filoli estate outside San Francisco, California, on Wednesday. © Doug Mills/The New York Times/AP

Darren Woods, the head of ExxonMobil, which is building a multibillion-dollar petrochemical plant in southern China, told reporters Wednesday morning that he would not attend the dinner.

“China-US government relations are going to ebb over time,” Woods said. “Both countries are too important to the global world order to find no balance, even if that balance will change.”

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Shi Yinhong, an expert on US-China relations at Renmin University of China, said both governments’ preoccupation with national security would put a ceiling on relations. “If economic interests conflict with national security, national security will undoubtedly take precedence,” Shi said.

China’s increasingly strong domestic security apparatus has unsettled many foreign companies, raiding US consulting firm Bain & Co and detaining five local employees of due diligence group Mintz. Beijing has also banned the use of chips from the US group Micron in critical infrastructure due to cyber security risks.

Michael Hart, president of the American Chamber of Commerce in China, said Beijing’s scrutiny of American companies in the country sent “mixed messages” and he hoped Xi’s friendly rhetoric would trickle down through the bureaucracy.

Given the uncertain trajectory of China’s economy, which has been hit by a sluggish real estate sector and weak exports, Hart added that some American groups remained pessimistic. China has struggled to kick-start strong growth since lifting pandemic controls this year. But he said for many companies, “China is still an important market and profitable”.

Beijing “realizes that the private sector is getting quite nervous,” said Emily Kilcrease, a technology expert at the CNAS think tank.

While Xi sought to reassure US companies at the dinner, unless Beijing eases pressure on US multinationals and stops imposing travel bans on foreign executives, “these concerns from the private sector will continue to persist despite the rhetoric”, she added.

Xi told business leaders in San Francisco: “The most important question for us is, are we adversaries or partners?” If the US and China see each other as rivals, he warned, “it will only lead to misinformed policies, deceptive actions and undesirable results”.

Additional by Nian Liu in Beijing

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