China and foreign CEOs dance ever trickier tango

Shall we dance. Beijing is awash with dance partners this week as CEOs of 100 or so multinational giants such as Apple and AMD gathered for the two-day China Development Forum. It's being held, though, as both sides try out different moves: foreign firms are looking to de-risk from China, whereas the government is pressing ahead with phasing out some overseas technology. That makes the increasingly uneasy relationship between the two sides primed for missteps.

Created in 2000 just before the People's Republic became a member of the World Trade Organization, the China Development Forum is committed to “engaging with the world for common prosperity”. That ought to be music to a global audience’s ears. And in his opening speech this year Chinese Premier Li Qiang hummed the right notes, reiterating his administration's efforts to attract foreign investors and welcome companies from all countries to deepen their foothold in China’s $18 trillion economy.

A shaky economic recovery and escalating geopolitical tensions are taking a toll, though. Foreign direct investment fell by a fifth in the first two months of the year, per official data released on Friday, worse than the 8% decline in the whole of 2023.

That’s not to say global giants are ready to turn their back on the world’s second-largest economy. Apple CEO Tim Cook said last week that no supply chain is as critical to the $2.7 trillion company as China's. Sure, the iPhone maker is shifting some of its manufacturing contracts elsewhere, but more than 75% of its 200 major suppliers still maintain production in the country.

Chinese leaders, meanwhile, seem keen to engage directly with the West's business elite. The Wall Street Journal reported that Cook, HSBC's Noel Quinn and others are due to dine with Xi Jinping this week, months after China's leader broke bread with corporate titans on a visit to San Francisco.

More hazards are appearing on the dance floor, though. Washington has for several years been spearheading a campaign to exclude Chinese technology firms like Huawei and SMIC from global networks, and to prevent the country getting hold of the most advanced semiconductors. Beijing wants to delete U.S. products from its turf, too; the Financial Times reported on Sunday, for instance, that AMD and Intel microprocessors are now being phased out from government computers and servers.

It may only take two to tango. But the more noise and distractions there are, the greater the chance that the dancers trip up.