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Xi Jinping is caught in a bind: How do I undermine US power while also courting its investors?

Tom Porter   

Xi Jinping is caught in a bind: How do I undermine US power while also courting its investors?
  • Xi Jinping on Wednesday was playing nice with US business leaders and academics on Wednesday.
  • He's seeking to boost China's faltering economy.

China's President Xi Jinping presented an uncharacteristically affable image Wednesday, smiling broadly for US business leaders at a meeting in Beijing.

The Chinese leader sought to assure investors including Cristiano Amon of Qualcomm and Stephen Schwarzman of the Blackstone Group that the downturn in China's economy, its biggest contraction in 15 years, would be over soon.

He went on to paint a bright picture of future US-China relations, saying, according to the Xinhua state news agency.

"Whether it is traditional fields such as economy, trade and agriculture, or emerging fields such as climate change and artificial intelligence," he said, "China and the United States should help boost each other's development."

Only weeks ago, Xi struck a very different tone.

In remarks to lawmakers in Beijing at the start of his third term in office, he accused the US of being the cause of China's woes.

"Western countries led by the United States have implemented all-around containment, encirclement and suppression of China, which has brought unprecedented severe challenges to our country's development," Xi said in a speech.

Xi's strategy for global dominance

This sharp contract, analysts say, reflects Xi's desire to pursue two apparently contradictory goals at once.

On the one hand, Xi is seeking to implement China's long-term strategy of displacing the US as the world's pre-eminent power.

His rhetoric in the speech to Communist Party officials reflects his long-standing grudge against US global influence and desire to break it.

In Ukraine, China is at loggerheads with the US, providing crucial economic and diplomatic support to Russia.

Xi is intensifying threats to attack Taiwan, long a US ally. An admiral in the US Navy this week warned that China was building its military up at a pace not seen since World War II, and could be planning on attacking Taiwan in a matter of years.

Experts are warning that a dangerous new anti-democratic axis is forming between China, Russia, Iran, and North Korea, with China its wealthiest and most powerful member.

Jonathan Ward, an analyst at the Wilson Center, told CBS on Wednesday that US executives are committing a serious mistake in continuing to do business in China.

There's an "alternative universe for businesses," he said, where companies can still make money in China.

"But eventually that's going to collide," he argued. "And it's really going to impact and potentially even destroy major American companies. So I think they have an interest now in coming to terms with what the US-China relationship really looks like."

But Xi is clearly wary of aggravating the US too much at his stage.

China's economy, after decades of growth, is experiencing its most serious problems in decades. A property market crisis has caused spiraling unemployment, consumer spending is dropping, and foreign investors are fleeing.

Ali Wyne, an analyst with the International Crisis Group NGO, told Business Insider that China was straining to avoid a total collapse in relations with the US.

"Courting foreign investment is important for both objective and narrative purposes: China is trying to manage a challenging set of growth headwinds and signal that influential business leaders are still making a long-term bet on the country," he said.

"In addition, while it is competing vigorously with the United States, it seeks to avoid a total rupture of relations with the world's preeminent power; sustained engagement with the US business community is essential to that end."

As part of his bid to smooth ties with the US and secure investment last November, Xi made a number of concessions to President Joe Biden, offering to help tackle fentanyl trafficking and work together on limiting the use of AI in nuclear weapons.

Some analysts say Xi is trying to buy time, easing tensions with the US to boost the economy, but without fundamentally altering his global ambitions.

"It can bring some stability but not change the nature of a relationship that probably hasn't found bottom yet," said Robert Daly, director of the Wilson Center's Kissinger Institute on China and the United States, speaking to NPR in November.

Underscoring the gap between Xi's rhetoric Wednesday and reality, only days ago, the US and UK accused China of conducting an extensive and yearslong hacking campaign targetting businesses, politicians, and other public figures.

It could be seen as a timely reminder of Xi's core priorities.

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