China is willing to be a ‘partner and friend’ of the US, Xi tells American CEOs

(CNN) — China is willing to be “a partner and a friend” of the United States, Chinese leader Xi Jinping told American business leaders in San Francisco on Wednesday, as he sought to court US businesses amid a decline in foreign investment in China.

In a speech evoking decades of shared history and laden with symbols of warm US-China ties, Xi told a dinner event on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum that the most fundamental question shaping bilateral relations is whether they the countries are rivals or partners.

“If we regard each other as the biggest rival, the most significant geopolitical challenge and an ever-pressing threat, it will inevitably lead to wrong policies, wrong actions and wrong results,” Xi told an audience that included Apple CEO Tim Cook and Tesla CEO Elon Musk.

“China is willing to be a partner and friend of the United States,” he added.

Xi was given a standing ovation by the executives. His speech came a few hours after he held extensive talks with US President Joe Biden, where the two leaders made positive steps in stabilizing rocky relations between the world’s top two economies.

Hosted by the US-China Business Council and the National Committee on US-China Relations, the evening offered Xi a chance to appeal directly to American executives, who have grown increasingly wary of China’s economic slowdown and Xi’s tightening grip on the economy, including a widening national security crackdown that has spooked foreign businesses.

In his speech, Xi struck a conciliatory tone, saying China and US should not engage in a zero-sum game, in which one wins at the expense of the other.

“China has never bet on the United States to lose, has never intervened in US internal affairs and does not intend to challenge or replace the US. China is happy to see a confident, open and prosperous US,” Xi said.

Similarly, he said, the US should “welcome a peaceful, stable and prosperous China.”

Xi dedicated a significant part of his speech to highlighting long-standing relations between the American and Chinese people — and the important role they played in fostering diplomatic relations.

He reached deep into history to name check the “Flying Tigers” — a group of American pilots who helped China fight Japan during World War II.

He also cited his own “unforgettable experience” staying with an American family in Iowa during his first trip to the US nearly four decades ago. “To me, they are America,” he said of his host family.

Xi recalled entering the US on that trip through San Fransisco, which he said formed his “first impression” of America. The then 31-year-old also posed for a photo in front of the iconic Golden Gate Bridge, a picture he says he has kept to this day.

“This morning President Biden dug (the photo) out from somewhere and showed it to me,” he said to a ripple of laughter in the room.

In an effort to foster personal ties between the two countries, China will invite 50,000 young Americans to visit China for exchanges and studies over the next five years, Xi said.

“We need to build more bridges and pave more roads for people-to-people exchanges, instead of erecting various obstacles and creating a chilling effect,” Xi said.

Economic challenges

Dexter Roberts, director of China affairs at the Mansfield Center at the University of Montana, said Xi’s overtly friendly tone was a reflection of China’s economic troubles.

China’s economy enjoyed a solid start to 2023 after emerging from three years of Covid restrictions, but the recovery fizzled out in the second quarter. It is now grappling with mounting challenges, ranging from weak consumer spending and a deepening property crisis to a slump in foreign investment.

Earlier this month, a gauge of foreign direct investment into China slipped into the red for the first time since 1998, underscoring the country’s failure to stem capital outflows.

“This isn’t a good time, given the state of the economy, to have hostile relations with American businesses and with the United States,” said Roberts. “When the economy goes south, top Chinese leaders start to say: ‘We want to work with foreign businesses and our own private companies.’”

Liu Dongshu, an assistant professor focusing on Chinese politics at the City University of Hong Kong, said China needs to signal its “willingness to open” amid its economic woes.

“China wants to have a better diplomatic, international environment to boost (business) confidence,” Liu said.

“This is why China wants to shift its narrative a little bit and wants to be nicer and have a warmer tone and attitude, to signal that China is still a good place to invest,” he said.

While rising geopolitical tensions are partly to blame for the exodus of capital, with the US imposing investment restrictions on China’s high-tech sector, foreign companies and investors have also grown wary of increasing risks within the country, including the possibility of raids and detentions.

Under Xi, China has further expanded the scope of its anti-espionage law, raided US consultancy and due-diligence firms and detained executives in the name of national security, sending a chill through the foreign business community.

Meanwhile, an intensifying regulatory crackdown has also shaken the Chinese business community, where more than a dozen top executives from sectors including technology, finance and real estate have gone missing, faced detention or been subjected to corruption probes this year.

Fred Hu, founder and CEO of Primavera Capital Group, told the Bloomberg New Economy Forum in Singapore last week that “Chinese entrepreneurs are lying low, or lying flat.”

“This sense of insecurity, in my observation, in the Chinese entrepreneur community, is really — I have not seen it like this since 1978,” Hu said, referring to the year China embarked on a path of reform and opening in the aftermath of the Cultural Revolution.

“The single biggest priority in my mind is legal reform, is really to establish true rule of law that is essential for the healthy function of (a) modern market economy, which China is,” he said, stressing the importance of protecting entrepreneurs from “arbitrary political interference and worse, even prosecution.”

If China “really commits to rule of law and market reforms, I do think the confidence will slowly but surely come back, then the animal spirit will be rekindled,” he added.

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CNN’s Simone McCarthy and Michelle Toh contributed reporting.