Chinese President Xi Jinping addresses corporate leaders during the Asia-Pacific Economic Cooperation (APEC) CEO Summit in San Francisco, emphasizing the Chinese Communist Party's commitment to creating a business-friendly environment. However, it remains uncertain whether these remarks can halt the ongoing exodus of foreign investment from China. Many foreign companies have been reconsidering their investments due to burdensome government regulations and legal challenges faced in the country.
Xi pledges to protect foreign interests, expand industries open to foreign investment, grant equal treatment to foreign investors, and strengthen intellectual property rights. He also promises to introduce measures to facilitate travel and residence for foreign businesspeople. However, China's economic growth has slowed, raising concerns about heavy-handed government control and the diversification of supply chains, both of which have contributed to a significant decline in foreign direct investment. The situation is exacerbated by a real estate crisis, high youth unemployment, and a troubled banking system.
Furthermore, actions by the US, such as restrictions on Huawei and the sale of advanced semiconductor technology to China, have also hampered Chinese interests. Experts remain skeptical about whether Xi's remarks will sufficiently address the concerns of foreign investors and successfully reverse the decline in foreign investment in China.Petri is expressing his uncertainty about the future in an email, underscoring how the unpredictable nature of U.S.-China relations has prompted many American companies to withdraw from China. He believes that rebuilding trust will necessitate a positive environment over an extended period of time. Moreover, Petri has emphasized that addressing these issues will not immediately resolve China's economic challenges, but it may reassure domestic investors that the deterioration of U.S.-China relations has ceased.
According to Rafiq Dossani from the RAND Center for Asia Pacific Policy, business leaders are dissatisfied with Xi's remarks as he fails to address specific concerns such as the Foreign Relations Law and the Anti-Espionage Law. These laws have created compliance issues for foreign companies operating in China. The Foreign Relations Law exposes companies to potential prosecution if they comply with sanctions against China imposed by other countries, while the Anti-Espionage Law grants the state extensive powers to demand information from businesses and expands the definition of espionage. Dossani notes that the introduction of these laws has upset businesses worldwide, including those from the United States. However, Dossani mentions that Xi's discussion about equal treatment of foreign investors could be viewed positively.