Desperate for Love in Beijing
Beijing is definitely feeling the pressure. Whether it’s the domestic economy, foreign trade, or investment, all sectors are performing poorly. The once immense enthusiasm of American, European, and Japanese businessmen for the Chinese economy has faded.
The clear antagonism in U.S.-China trade is hard to miss. In response, Chinese officials have been reaching out to leaders in the business and political sectors of developed countries in recent months. While Beijing has not faced outright rejection in these efforts, they have not garnered much enthusiasm either.
The root of Beijing’s desperate attempts is obvious. Domestically, a severe and ongoing real estate crisis has led to a decrease in home purchases and construction projects. The real estate crisis has led to wealth loss and, coupled with other factors, has resulted in Chinese consumers being unwilling to spend, while the Chinese government’s hostile attitude towards private enterprises has weakened entrepreneurs’ willingness to expand investment or hire new employees.
Due to varying degrees of rejection of Chinese trade by the U.S., the EU, and Japan, and with companies in these regions actively diversifying their overseas business, shifting production procurement away from China has slowed down Chinese exports.
With a lack of support from both domestic and foreign economies, Beijing has launched a recent “charm offensive” in an attempt to regain the enthusiasm of foreigners who once helped China develop rapidly to boost the economy.
At the Asia-Pacific Economic Cooperation summit held in San Francisco in November last year, Xi Jinping met with American business leaders, assuring them that China welcomes them and provides a thriving business environment. Earlier this year, he invited a large group of American business leaders to Beijing to convey the same message. Shortly after that, Xi Jinping traveled to Europe to convey the same message to political and business leaders.
While both Americans and Europeans welcomed him positively and politely, these efforts have not yielded substantive results; there has been little improvement in investment flows and trade, if any at all.
Recently, the Chinese government has made similar attempts towards South Korea and Japan. Chinese Premier Li Keqiang met with South Korean President Yoon Suk-yeol and Japanese Prime Minister Fumio Kishida in Seoul. This was the first such meeting since 2019, with Li Keqiang aiming to promote trade among the three countries and attract investment to China.
Li Keqiang made similar promises to South Korea and Japan as Xi Jinping did to the U.S. and Europe, but he went further by trying to revitalize a trilateral free trade agreement that was first proposed in 2012 but has been stagnant due to various reasons. At the same time, Li Keqiang emphasized the shared Asian tradition of these three countries, seemingly attempting to weaken close economic and diplomatic ties between any of these countries and the U.S.
In Seoul, everyone was courteous, much like the attitude towards Americans and Europeans before, but Li Keqiang evidently did not make any substantive progress. Talks about cooperation in trade and clean energy were clichés with no concrete outcomes, not even a single plan, let alone commitments. While Li Keqiang insisted on separating economic, trade, and diplomatic security issues, security concerns made the meeting unpleasant.
Yoon Suk-yeol and Fumio Kishida pressured Li Keqiang, hoping that China would help North Korea reduce missile tests and other hostile behavior. Li Keqiang did not address these concerns but warned South Korea against “politicizing trade” (as if Beijing would never do such a thing). Kishida mentioned the recent military exercises near Taiwan conducted by China, reminding Li Keqiang that activities in the Taiwan Strait are “extremely important” for Japan and the international community.
He may have also told Li Keqiang that Japan is even more directly committed to Taiwan’s defense than the United States, causing Li Keqiang concern that without resolution of these and other security issues, progress in various economic aspects he seeks cannot proceed.
Undoubtedly, if the Chinese government had been less high-handed in past trade issues, less demanding, less arbitrary in weaponizing trade, these overtures would have been more effective. For example, during the pandemic, China cut off the export of critical supplies; the Chinese government insisted that foreign companies operating in China share proprietary technology and trade secrets with Chinese partners.
Additionally, due to territorial disputes, Beijing had previously cut off rare earth supplies to Japan, and now, to some extent, the Chinese government is paying the price for such actions by not obtaining the foreign investment it desires.
The author:
Milton Ezrati is a contributing editor for The National Interest magazine hosted by the Human Capital Research Center at The State University of New York at Buffalo (SUNY) and is the chief economist for the renowned communication firm Vested based in New York. Prior to joining Vested, he served as chief market strategist and economist for companies such as Lord, Abbett & Co. He frequently writes for City Journal in New York and regularly blogs for Forbes. His latest work is “Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live.”
*(Translated and rewritten from a news article about the challenges faced by Beijing in international relations and trade)*