“Artificially creating technological barriers and moving industrial supply chains outside of China will only lead to division and confrontation.” According to state broadcaster CCTV, Chinese President Xi said this to Dutch former Prime Minister Mark Rutte, who visited Beijing for the first time in five years on Wednesday. “The Chinese people also have the right to fair economic development, and no force can hinder China’s technological progress.”
The comments show Xi’s increasing irritation. Under diplomatic pressure from the US, the Netherlands announced plans last summer to ban one of its top companies – ASML – from shipping its most advanced computer chip machines to China. This has led to increasing trade tensions between the two countries in recent months. According to observers, the meeting between Xi and Rutte, who is mentioned as a candidate for NATO’s chief executive, was partly aimed at removing the fuse from the economic powder keg.
Unfair competition
Xi also spoke for an hour and a half on Wednesday with about twenty American CEOs who had traveled to Beijing in recent days to participate in the China Development Forum, the Asian counterpart of Davos. In recent days, top executives from Apple, Exxon and HSBC were present at this important economic forum.
China is also in a strategic dilemma there. While Xi strives for global hegemony on the one hand, he still desperately needs wealthy foreign investors on the other. It is doubtful whether the remarkable personal summit meeting with the Chinese leader could reassure American CEOs. With growth in China slowing dangerously and tensions rising between Beijing and Washington, more and more foreign companies are moving their money out of China to invest elsewhere.
In a country where intellectual property is barely protected and local state-owned companies generally enjoy preferential treatment, Western companies have long complained about unfair competition. Add to this the new anti-espionage law and the increasing number of investigations and interrogations of American consultants, banks and asset managers, and you understand that executives from Blackstone, Qualcomm and FedEx, among others, had many questions for Xi on Wednesday about the interpretation and application of the new rules in China.
Chinese complaint to WTO
Xi was therefore keen to reassure American business leaders on the economic front. The Chinese leader emphasized, among other things, the need to avoid the so-called ‘Fall of Thucydides’. That is the theory that a rising power and an established power are inevitably doomed to conflict sooner or later.
According to Chinese state media, Xi emphasized that there is no reason for Beijing and Washington to decouple economically and that it is important for Beijing that American multinationals continue to invest in China. Chinese economic growth has not yet reached its peak, was the main message of the meeting with the CEOs.
During the conversation, Xi casually mentioned that China has filed a complaint with the World Trade Organization (WTO) against the threatened US import tax on Chinese electric cars. Or how balancing artist Xi also cunningly used the carrot and the stick in this conversation. Wondering if that approach will work.
