Has China’s Xi succeeded in assuring US execs of economic prospects?

Hardly, as the Chinese leader reportedly said China will continue to centralize its economy: report.
By RFA Staff and Ray Chung for RFA Cantonese
2024.04.01
Has China’s Xi succeeded in assuring US execs of economic prospects? A screenshot of China’s state-run CCTV’s broadcast that shows Chinese President Xi Jinping.
Screenshot/CCTV

As Chinese President Xi Jinping embarked on a high-profile meeting Wednesday with leaders of the biggest American businesses to woo foreign capital and confidence, China’s rich are scrambling to dump assets and leave the country in an apparent vote of no confidence.

While China’s state media reported little of the 90-minute closed-door meeting, executives from the United States business delegation that included the chief executives of Qualcomm, FedEx and BlackRock, have revealed to foreign media outlets that they observed China’s economic confidence to be very low.

An anonymous CEO told former CNBC anchor Michelle Caruso-Cabrera that he had asked Xi tough questions, to which he received tough responses.

“Overall, the number one thing that was clear to this person was China is not backing away from centralizing its economy, that it is not going to pursue pro-market reforms,” Caruso-Cabrera said in a televised CNBC interview. 

She told the American broadcaster that it is a “big negative” as these business leaders were there to hear what Xi had to say about the future of the Chinese economy.

While Xi tried to send a very positive message about the economy, telling the CEOs that it hasn’t peaked, he also said a lot of people have told him how to fix the economy, but they know how to fix their economy.

“The bottom line is the business environment is terrible and that they don’t want to do the pro-market reforms that have been suggested; they don’t believe in them,” Caruso-Cabrera added.

She also pointed out that Beijing likens the private sector to small businesses, which implies from the Chinese government perspective that these firms are not big and stable enough to support the economy. That notion would have aligned with Xi’s policy of advancing state enterprises and a retreat of the private sector.

Foreign businesses have been spooked by China’s draconian measures during the COVID-19 pandemic and tightened regulations such as the anti-espionage law, and raids on consultancies and due diligence firms. 

The waning confidence is reflected in foreign direct investment dropping to a 30-year low. It sank 8% last year as the economy sputtered at its slowest growth pace since 1990.

Xi reassured the American CEOS that “China’s reforms will not pause, the opening will not stop,” according to a report by the official Xinhua news agency released after the meeting. 

Xi was quoted as saying he would be planning and implementing a series of major measures to deepen reforms that will build a “market-oriented, legal and international first-class business environment.”

But Caruso-Cabrera pointed out that in conversation with asset managers, the rich in China are worried and selling Chinese assets on a large scale, including private jets and high-end properties. Because of the dangers of having money in China, they are moving it offshore.

She also said  Xi stated that China’s political system will not change, with China’s stance that Taiwan is a renegade province that should be reunited with the Mainland, a red line. 

Chen Li-fu, president of the Taiwan Association of University Professors, told Radio Free Asia that for Xi to personally meet the executives, it means “China’s economy is really not in good shape, and China’s foreign capital outflow is really serious.”

But Chen doesn’t believe the meeting will reverse the trend of Beijing restricting free trade and free information. Which means that foreign investors aren’t likely to invest in China, he added.

Translated by RFA Staff. Edited by Mike Firn and Taejun Kang.

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