Global CEOs including Apple’s Tim Cook, ExxonMobil Chairman Darren Woods and HSBC’s Noel Quinn will attend China’s version of Davos in Beijing this weekend, as international criticism mounts that China’s industrial oversupply could lead to a “slow-motion train crash” for world trade.
Nearly 90 CEOs and heads of multilateral organizations such as the International Monetary Fund are expected to attend the China Development Forum. U.S. leaders in particular are returning to the event this year in larger numbers, attendees said, in a sign that bilateral tensions have eased slightly after hitting new lows last year due to a spy balloon incident.
However, foreign visitors to the conference – held in the scenic Diaoyutai State Guesthouse in Beijing – remained undecided whether current Chinese Prime Minister Li Qiang will officially attend the event this year.
There was no confirmation of reports that he will cancel a roundtable with CEOs, traditionally one of the few annual opportunities for foreign business leaders to interact with Chinese government officials of his stature.
In an apparent sign of support for the event, President Xi Jinping this week made a rare visit to a foreign-invested firm – German chemicals group BASF’s battery joint venture in central Hunan province – and his cabinet announced a 24-point plan to support foreign countries. businesses.
Beijing will seek to counter international criticism over its response to weak demand resulting from the slowdown in the real estate sector, with the aim of further stimulating production. This policy is incentivizing oversupply and dumping in global markets, threatening the “deindustrialization” of trading partners, analysts say.
Releasing a report this week detailing China’s efforts to “de-risk” its economy by reducing dependence on foreign suppliers, Jens Eskelund, president of the European Union Chamber of Commerce in China, called for immediate talks between the Chinese and EU politicians to avoid trade tensions as European producers struggle to compete with dumped products.
“I think what we see right now is a slow-motion train crash unfolding,” Eskelund said in a briefing on the report. “I think there is still the possibility of finding exit ramps, and that’s what we’re hoping for.”
He said overcapacity in China’s industry is “at all levels” and “I don’t think we’ve seen the full impact yet.”
“There needs to be an honest dialogue between the EU and China about what will happen,” he added, “because it is difficult for me to imagine that Europe will sit in silence and witness the accelerated deindustrialization of Europe.” .
Jon Harrison, managing director of emerging markets strategy at TS Lombard, said China’s manufacturing-led economic model will continue to generate trade tensions regardless of whether Donald Trump or Joe Biden wins the US election this year.
“Further escalation is inevitable simply because the United States and even Europe will not be able to absorb the flow of manufactured exports from China, driven by high-tech and green transition products,” Harrison said in a report of research.
The CDF and China’s other flagship international conference, the Boao Forum for Asia on the southern island of Hainan, traditionally follow the annual parliament meeting, where the party announces its economic growth goals for the year .
This year’s target of 5% gross domestic product growth is seen as ambitious by analysts. Foreign direct investment in China slumped to its lowest level since the 1990s last year as an expected strong recovery from pandemic-era lockdowns failed to materialize.
Foreign and domestic investors have been rattled by a long-running real estate crisis that has undermined domestic demand and created deflationary pressures, leading to stock market crashes last year that were halted only by heavy state intervention.
Last year’s China Development Forum was marred by the detention of five local employees of US-based due diligence group Mintz, just days before the opening ceremony. The incident was the first in a series of raids on foreign consultancies in China for security reasons. A year later, Mintz employees are still in detention on undisclosed charges.
In addition to raids on consultancies, which have threatened investors’ ability to conduct due diligence, companies have been spooked by amendments to an anti-espionage law that they consider too broad, as well as new data security rules that they argue are too vague.
Despite these uncertainties, U.S. business leaders will attend this year’s event in greater numbers, according to Han Shen Lin, China head of consultancy The Asia Group.
Ahead of the forum, Apple’s Cook was photographed walking along the Bund in Shanghai, while an interview with state newspaper China Daily portrayed him endorsing Xi’s Communist Party’s latest slogan, “new productive forces of quality”, which many interpret as an advancement in level. value chain.
“I think it’s essential and it represents the future,” the newspaper quoted Cook, whose company employs hundreds of thousands of workers in China, as saying.
Lin said U.S. business leaders attending the CDF tend to come from financial services, asset management, biopharma and other industries that require scale and where “there is still the rule that if you don’t have a China strategy you don’t have a global strategy ”.
The European Chamber’s Eskelund said everyone at the CDF will be seeking answers from politicians on key challenges facing the economy, including oversupply, local government indebtedness and the future of reforms.
“I think people are looking for clues about where China is going,” he said. “All the talk about some sort of sustained commitment to reform and opening up – what will that mean in concrete terms?”