Recently, Elon Musk, CEO of Tesla, visited China and met with several high-level officials. For Musk, the visit was part of his efforts to expand his business. For China, the visit signaled its commitment to openness and its ongoing willingness to collaborate. Against a backdrop characterized by unprecedented geopolitical complexity and an unabating drive toward deglobalization, this commitment will facilitate a recovery in China’s economy. It also serves as the most effective response to certain countries’ schemes to encourage “decoupling and disconnection.”
Musk’s visit was not an isolated case. Global business titans have been flocking to China in droves, mirroring the number of local Chinese government delegations that have recently been heading abroad to attract foreign investment. The dismantling of China’s “zero-Covid” regime does much to explain the timing of these visits, but they are also rooted in mutual interest. China needs foreign investors, and foreign investors need China’s market. It’s no secret that many multinational corporations are now cautiously taking a close look at China. Some foreign entrepreneurs have been more low-key than Musk on their trips to China, observing more and talking less. Although many have described these trips as “business as usual,” multinational corporations have felt the effects of the strain in Sino-U.S. relations. They have been caught in the middle, yet strive to resist calls for “decoupling and disconnection.” Musk has explicitly stated that Tesla opposes “decoupling” and wants to continue expanding its operations in China and share in the country’s developmental opportunities. This attitude is commendable.
Over the past four decades, valuing, attracting and utilizing foreign investment has been critical to the development of China’s society and economy. At the beginning of the reform era in the late 1970s, China was keenly aware of its capital shortages. When foreign entrepreneurs came to China, they were often received by party and national leaders. This allowed the Chinese government to effectively demonstrate its openness to the world. Now that China has become the world’s second-largest economy, the role of foreign investment remains crucial. It not only makes up for domestic capital deficiencies, but brings with it advanced technology, management experience and the steady exchange of information. Foreign investment is necessary for high-quality economic development and the construction of an innovative nation. Ensuring stable foreign trade and investment has been an urgent task in the government work on the economy in recent years.
Musk’s return to China was accompanied by speculation of some major new announcements about Tesla’s business in the country. As Sino-U.S. relations have deteriorated, these kinds of announcements would have carried added significance. Nonetheless, a handful of skeptics derisively point out that Musk’s visit was nothing more than a profit-chasing venture. This is hardly worth mentioning as that’s what businesspeople do. Conducting business is precisely how China’s economy and society have reached their current levels.
It has often been said that economic and trade relations are the “anchor” and “propellant” of Sino-U.S. relations. In recent years, as relations have deteriorated, some believe that Sino-U.S. economic and trade relations have lost these functions. The weight of this “anchor” indeed requires reassessment, yet undoubtedly, it remains the most reliable stabilizing factor in Sino-U.S. relations, and cannot be replaced. As the world’s two leading economies, China and the U.S. should not descend into a zero-sum game. Insisting on “decoupling and disconnection” only harms oneself while damaging others. Multinational corporations will suffer, which is why individuals like Musk are making fervent appeals. Recently, the U.S. announced that the 14 members of the “Indo-Pacific Economic Framework” have reached consensus on supply chain coordination. Over 30 American business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, expressed reservations in an open letter to Washington about this U.S.-led agreement aimed at “excluding China.” Clearly, as the Chinese government forms a united front to counteract “decoupling and disconnection,” multinational corporations are a force worth winning over.
Opening up to the outside world is as essential as domestic liberalization, and the two complement each other. The circumstances of Chinese companies and entrepreneurs will profoundly influence global entrepreneurs’ perceptions of China. Recently, Craig Allen, president of the U.S.-China Business Council, indicated that favorable treatment of private domestic enterprises would boost foreign investment confidence in China. This sentiment reveals the symbiotic relationship between domestic and foreign enterprises, characterized by both competition and mutual understanding. The Chinese government should steadfastly advance high-level openness to the outside world, promote fair competition among enterprises from all nations, and create a business environment characterized by market-orientation, rule of law and internationalization. In particular, it should wholeheartedly respect and cherish entrepreneurs, vigorously managing the public opinion environment that readily stigmatizes them. Recently, the Cyberspace Administration of China held a symposium to optimize the online business environment, promising to address harmful online information that troubles enterprises and entrepreneurs and focus on enhancing the online business environment. This requires scrutinizing the roots of unfavorable public opinion and uprooting its breeding ground. Correcting the mindset of a portion of the population that is hostile to business, and sees private enterprises and foreign investment as alien forces, is a challenging task that requires long-term commitment from governments at all levels.
Currently, China’s economy is gradually getting back on track, but its foundation remains unstable, which can be seen in the recent lackluster investment and consumption data, the emergence of financial risks in some regions, and severe weakness in the labor market for youth. To reinvigorate China’s economy, the foundational role of domestic and foreign enterprises must be leveraged. Of course, this in no way suggests that entrepreneurs should be treated with a purely utilitarian or opportunistic attitude. All levels of government must treat domestic and foreign capital the same, proactively address their concerns and effectively allay their worries.
This will not only thwart any schemes for “decoupling and disconnection” but will also allow China’s economy to navigate past perilous shoals and get onto a path of high-quality development characterized by sustained growth and a hopeful populace.
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