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Chinese leaders are stepping up a charm offensive with US multinationals and threats of retaliation earlier as Beijing shifts tactics to prevent trade with Washington from deterring foreign investors.
Beijing has a reassuring message in its relations with US companies. At a meeting last month, President Xi Jinping's chief of economic policy, Liu He, told visiting US business representatives that Chinese operations of US companies would not be targeted by Beijing's commercial counterattacks. . "We will not allow retaliation against foreign companies," Liu said, according to people familiar with the event.
Exxon Mobil
Body
A $ 10 billion project in southern China has allowed CEO Darren Woods to receive a hearing with Prime Minister Li Keqiang last Friday on a national television show. When it was completed, the petrochemical complex would be one of the largest foreign investments in China and would constitute a step in the opening of an area of strategic importance.
More brokerage is likely this weekend. Vice President Wang Qishan is scheduled to meet a group of Wall Street tycoons, including senior executives from
JPMorgan Chase
& Co.,
Citigroup
Inc.
and
Blackstone Group
.
According to a Chinese official, his message will be that of the usual company.
The tone is a marked change from a few months ago when the Trump administration began to multiply tariff threats on tens of billions of dollars of Chinese products, and Beijing promised to buy back the dollar for one dollar. At the time, Vice President Wang warned American business leaders that there would be loss of life. President Xi told others that Beijing would "fight back" in the United States.
According to other officials and government advisers, Chinese leaders are now increasingly worried that the spiraling trade battle could hit the economy and investments considered critical to China's future.
It is "logical that they do not kill the goose that lays the golden eggs," said William Zarit, business consultant and president of the American Chamber of Commerce in China.
While US companies account for about 2% of foreign direct investment in China each year, many deals are made in key sectors –
Intel
Corp.
in semiconductors and
General Electric
Co.
in aviation – helping Chinese companies improve their technological and management know-how. Punishing big US companies could hurt the confidence of other foreign investors in China.
Beijing does not give up reprisals. He promised to impose $ 60 billion on US products if the Trump administration were to move ahead in the coming weeks with $ 200 billion in penalties on the $ 50 billion already perceived. China's plans would bring the total US imports potentially subject to Chinese tariffs to $ 110 billion, or 85 percent of US goods entering China last year.
Last week, President Trump increased pressure on China by threatening tariffs on $ 267 billion of its imports, virtually the rest of Chinese products imported by the United States. threaten the "qualitative" measures of retaliation.
Chinese officials actually crashed
Qualcomm
Inc.
make an offer to buy the Dutch firm
NXP Semiconductors
NV in July. Other US companies may see delayed licensing approvals or stricter regulatory control by officials responding to tense relations between Washington and Beijing.
"It does not take a central government directive for a local official to detect how the political winds are blowing," said Jacob Parker, vice president of Chinese operations at the China-US Trade Council.
China's strategy, originally designed to force Trump officials to return to the negotiating table, has so far not been profitable for leaders. Beijing is turning to US companies to help put pressure on the Trump administration for a negotiated settlement.
If US or foreign companies focus on expansion projects or shift their production to other countries, this could worsen Beijing's efforts to stop a slowdown in the world's second-largest economy. Government advisers and some Chinese business leaders said it would also reduce the goals of moving the economy up the value chain and stand as a defender of global trade rules.
"China can not continue to talk about reform and openness without opening up to the United States," said one of the advisers.
In recent conversations with officials of the Chinese Ministry of Commerce, some large US technology companies warned that they would be forced to relocate their production if they stayed late in the year. The Chinese authorities have sought to reassure US companies by offering to help mitigate the effects of tariffs, according to some officials and an expert in the sector, although the Chinese side has provided little detail on how they would.
China is also in an increased need for foreign capital, especially in sectors where domestic firms lack money and know-how. For example, Beijing has not only removed aircraft from its original list of products targeted for retaliatory rates, but is also increasing purchases of aircraft from companies such as:
Boeing
Co.
Boeing said Tuesday that Chinese airlines will likely purchase 7,690 aircraft worth $ 1.2 trillion over the next 20 years, up from 7,240 last year.
Similarly, China's energy demand exceeds the capabilities of domestic firms. This partly explains why Beijing is willing to allow wholly-owned foreign projects in the sector instead of forcing foreign companies into partnerships with Chinese oil and gas producers.
Since the beginning of last year, Exxon Mobil has been talking with the Chinese authorities about the construction of the petrochemical complex in Guangdong Province, according to people familiar with the issue. The project, which would be owned 100% by Exxon Mobil, would put the US company in direct competition with Chinese state-owned giant oil refiners who resisted plans to open the sector to wider foreign competition.
"They obviously want to save time because it takes years for multinationals to negotiate with state-owned companies," said an energy industry executive. "They do not care anymore about who owns equity, as long as the supply chain is in China."
Write to Lingling Wei at [email protected] and Yoko Kubota at [email protected]
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