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Keep faith in China, Li Qiang tells businesspeople at ‘Summer Davos’
As China hosted foreign and local delegates at the World Economic Forum’s “Summer Davos” in Dalian this week, Beijing’s No. 2 official struck a defiant tone.
First in a speech and then in private with a smaller group of executives, Li Qiang insisted that the recovery of the world’s second largest economy was on track, despite investors’ doubts.
Even the country’s property market crisis, characterized by falling prices and a glut of millions of unsold apartments, was improving, Li said at the closed-door event with foreign and local business leaders.
The prime minister said participants “should be confident about China’s economy,” said one person who attended the private meeting.
In the past, such sentiment would have been easily sold on the World Economic ForumChina Conference. Held in a giant purpose-built conference center with a lobby the size of four football fields, the “Annual Meeting of the New Champions” was once a magnet for the global business elite. A US executive recalled corporate jets fighting for space at the city’s airport in pre-pandemic years.
This year’s summit attracted 1,600 participants, a slightly higher number crowd bigger than in 2023 as China was emerging from control of the pandemic. But Western executives accounted for only about a fifth of those present, and top global executives were few and far between. The most prominent foreign politicians were Poland’s President Andrzej Duda and Vietnam’s Prime Minister Pham Minh Chinh.
“There were more foreigners than last year, but not as many Westerners,” said Zhu Ning, head of China at Brunswick Group. “People are cautiously optimistic about the outlook for this year, but uncertain about the long term,” he said of China’s Economy and business environment.
The World Economic Forum’s annual ‘Summer Davos’ event in China was a magnet for the global business elite before the pandemic © Pedro Pardo/AFP/Getty Images
The agenda included topics such as artificial intelligence and climate change, but parallel discussions focused more on the economy and the EU’s recent decision to increase tariffs in Chinese electric vehicles by up to almost 50%.
Li rebutted complaints that Chinese production of new energy goods was distorting trade, saying exports of electric vehicles and lithium batteries “enriched supply in the international market”.
Behind closed doors, he made efforts to win over skeptical foreign companies, saying he was there to listen to companies’ complaints and introduce China’s commerce minister to investors.
Foreign companies made presentations to the prime minister at the private meeting, including Coca-Cola, Exxon and Swiss human resources company Adecco Group, according to one participant.
Li’s presence for most of the day in Dalian represented a sharp contrast to the China Development Forum in March – the country’s biggest event for foreign executives – which the prime minister left after delivering his speech, contradicting the tradition of private meetings with business leaders.
Separately this week in Beijing, a government-backed “Invest in China” event praised successful foreign investments, including from Airbus, BMW, Intel and Novo Nordisk, the Danish pharmaceutical company whose weight-loss drug Wegovy was approved for sale in China this week. “Investing in China is investing in the future,” stated a CCTV report, which highlighted government support for projects.
There were signs that the charm offensive resonated with some in Europe.
On a recent visit, German Vice Chancellor Robert Habeck, whose country is a major investor in China’s automotive industry and has criticized the EU’s decision to impose tariffs, said the door was “open for discussions” about taxes.
On Wednesday, he appeared to go further, saying the European Commission must be prepared to resolve the tariff dispute “politically.”
An executive at a European carmaker in Dalian, who declined to be named, said one solution could be a sliding scale of tariffs that could be gradually reduced as a Chinese company locates production in Europe.
This would give European companies time to prepare for Chinese competition and encourage Chinese investors to create jobs on the continent – just as Beijing demanded of foreign car manufacturers when they entered its market decades ago.
“We will achieve a win-win situation,” said the executive.
Another big topic of side discussion was the US presidential election and what the outcome would mean for US-China relations.
“American and European political cycles and pandemic hangover anxieties have combined to produce protectionist and isolationist sentiments,” said David Adelman, managing director at Krane Funds Advisors in New York and a former U.S. ambassador to Singapore.
He said the U.S. election would involve “a heavy dose of anti-China rhetoric” but that “the smart people around both candidates understand that the U.S. and Chinese economies are interdependent and that, in the long term, the Americans benefit from globalization.”
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Concerns about China’s compliance with U.S. sanctions related to the war in Ukraine were also fueling reluctance among U.S. investors.
“There is a lot of capital sitting idle looking to invest in China,” Kungsheng Fan, head of China at Lazard Asset Management, said during a panel discussion.
Most investors privately predicted that China’s economic growth would continue to be “two-track”, with exports offset by uneven domestic demand. They will also be closely watching the third plenum in July, a meeting every five years where China’s leadership sets medium-term economic policy.
Li’s speech in Dalian “had the right sentiments about dealing with the symptoms as well as the root causes of China’s economic malaise,” said Eswar Prasad, professor of trade policy at Cornell University, but had “little to offer in terms of specific solutions.”
The prime minister “did not directly address the concerns of investors and analysts about the growing problems in the real estate market and other sectors of the economy or the apparent change in the government’s attitude towards private enterprise,” Prasad added.
Additional reporting by Wenjie Ding and Nian Liu in Beijing