Why is this important?

The CEOs realize that the two countries are too economically interconnected to be easily separated. But executives are becoming more cautious, a subtle but important sign of shifting dynamics in the powers of influence between the United States and China.

what are they saying?

“Previously, foreign companies were the ones begging, saying things like ‘Please let us into the Chinese market,’” Curt Tong, the former US envoy to Hong Kong, told Axios.

“Now it's more like 'convince us to stay,'" adds Tong, who currently works in the Asian group.

Earlier last week, Chinese President Xi Jinping hosted CEOs from delivery giant FedEx, chip maker Qualcomm, insurance giant Chubb and others.

It was the second time since November that Xi met with US executives: last fall, he dined with a group in San Francisco — where he also met with President Biden.

Meanwhile, US officials continue to criticize Beijing, a sign of continuing tensions.

For her part, US Treasury Secretary Janet Yellen warned of overproduction in China, which "distorts global prices... and harms American companies and workers."

China's main goal with CEOs: Increasing their enthusiasm for investment in China, where Xi plays a role that may have been unexpected in previous years, when companies were jockeying for space in China.

“The main takeaway — which is an extension of the San Francisco event — is that Xi Jinping himself hosted the event,” says Tong, who attended the California gathering, breaking with the tradition of meetings hosted by other senior leaders.

"The fact that he took the effort to carefully prepare and invite a group of really important CEOs shows his deliberateness in trying to allay concerns," he adds.

Current scene

The flow of foreign funds to China has declined. For the first time ever, foreign investors pulled more money out of China than they invested in it during a given time period last year, according to data.

The latest government data shows that foreign direct investment fell by 20 percent in the first two months of the year, compared to the same period in 2023.

The mystery lies in:

Years of prosperity are no longer what tempts companies. China's economic outlook currently looks bleak, as weak demand and a real estate crisis weigh on the economy.

National security concerns and surprise regulatory crackdowns have also undermined confidence.

“It used to be that 'China is the second-largest economy in the world, and you should do business there,'” hedge fund manager and noted investor Kyle Bass tells Axios.

He continues: "Well, now Xi Jinping has shown you that he can completely shut down industries."

Wendy Cutler, a former trade official in the Obama administration, says that in times of economic prosperity, some companies closed their eyes and turned their technology over to China... That was the price of staying in the Chinese market, and they felt it was worth it.

Now there's more doubt: "Businesses are skeptical when China says, 'We're open for business' and then a top business executive is detained and new national security legislation is passed," says Cutler, now vice president of the Asia Society Policy Institute.

The bottom line

Despite current difficulties, multinational companies will not abandon China completely and willingly – due to the side effects of deepening economic ties between the United States and China.