China urges foreign businesses to share their woes as investment declines

BEIJING — China’s Commerce Ministry met with foreign firms in Beijing this week in an effort to address operational challenges, but revealed little change on key issues.

Wednesday’s roundtable came as trade between the U.S. and China escalated, with both countries trying to stabilize strained relations between the world’s two biggest economic powers.

Although the Commerce Ministry meeting did not reveal much new progress on the 24 measures to support foreign businesses that were announced last summer, attendees said they were able to share specific challenges of doing business in China.

“The impression that most of us were left with was that there is a real desire on the part of MofCom to implement these measures,” Jens Eskelund, president of the EU Chamber of Commerce in China, said in an interview, noting that the ministry asked businesses to shared “specific examples”.

“I think the authorities actually encouraged openness and I think a number of participants were quite direct in the comments they provided,” he said.

However, the meeting did not clarify when the proposed changes to the data export rules would go into effect, Eskelund said. Forced technology transfers and a new state secrets law also did not come up at the meeting, he said, noting that perceived discrimination in public procurement remains an issue.

In the fall, China’s Cyberspace Administration published draft rules that signaled a softer stance, saying no government oversight was needed for data exports unless regulators determined it qualified as “important.” No final version has been revealed yet.

This week, China also announced an updated state secrets law that will take effect on May 1, underscoring the country’s growing emphasis on ensuring national security.

“What came up were concerns about changes in national security regulations impacting companies’ ability to do due diligence in China,” Eskelund said, noting that the Commerce Department’s response has been to share specific instances where have occurred, including any unfair treatment of local companies.

China’s Ministry of Commerce confirmed at a regular press conference on Thursday that, as disclosed about a month ago, at least 60 percent of the 24 measures have been implemented or progress is being seen and that it will continue to work on them. The ministry announced that representatives of more than 60 foreign companies and 9 associations were present at the round table on Wednesday.

“One issue we raised at the MofCom meeting was the overemphasis on finding investment from new companies,” said Michael Hart, president of the American Chamber of Commerce in China, who attended Wednesday’s roundtable.

“This drive most often comes from local officials, as they are usually measured by their ability to attract FDI,” he said.

Foreign direct investment in China has fallen to its lowest level in three years, according to official data, amid geopolitical tensions and slowing growth in the country.

Hart said it is difficult for companies not yet in China to complete due diligence and approve new investments.

“We would encourage the government to instead focus on solving the problems of the companies that are already here, many of which have been present in China for decades,” he said, noting that those businesses are in a better position to make additional investments. potentially increasing the attractiveness of new companies.

US-China tensions eased after US President Joe Biden and Chinese President Xi Jinping met in San Francisco in November. Biden, who faces re-election this fall, has stressed the need to compete with China while finding areas of cooperation.

The U.S. Transportation Department this week said Chinese passenger airlines could add 15 more round-trip flights to the U.S. each week starting March 31, Reuters said, noting that was only about a third of pre-pandemic levels.

Official and unofficial visits between the two countries have increased in recent months, including a weeklong trip to China in January by American high school students.

Chinese Premier Li Qiang met Wednesday morning with Suzanne P. Clark, president and CEO of the US Chamber of Commerce, according to the Chinese Ministry of Foreign Affairs.

“China will open its doors to the outside world even wider, continue to promote a world-class business environment that is market-oriented, law-based and internationalized, and provide more support and convenience for American companies and companies from other countries to invest and do business in China,” the text describing Li’s comments said.

The Ministry of Foreign Affairs late Thursday also said the two sides “held a new round of foreign policy consultations” in which “the two sides had frank, in-depth and constructive communication on relevant foreign policies, the international situation and regional hotspot issues.”

Salman Ahmed, director of the US Secretary of State’s Political Planning Department, and Miao Deyu, assistant foreign minister and director-general of the Political Planning Department of China’s Ministry of Foreign Affairs, met in Shanghai on Tuesday, the Chinese side said.

The U.S. Chamber of Commerce and the U.S. State Department did not immediately respond to requests for comment.

China next week begins its annual parliamentary meetings to discuss economic and other policies.