As China hosted foreign and domestic delegates to the World Economic Forum's “Summer Davos” in Dalian this week, Beijing's number two official struck a defiant tone.
Li Qiang, first in a speech and then in a private meeting with a small group of executives, insisted that the world's second-largest economy's recovery was on track despite investor concerns.
Speaking at a private event with local and international business leaders, Lee said the property market was recovering after years of slump, with prices falling and millions of unfinished apartments remaining.
“Participants should have confidence in the Chinese economy,” the prime minister said, according to a person who attended the private meeting.
Such sentiments would once have been easy to convey at the WEF's China meeting. The Annual Meeting of the New Champions, held in a massive, purpose-built conference center with a lobby the size of four football fields, was once a magnet for the global business elite, where corporate jets competed for space at the city's airport in the pre-pandemic years, one U.S. executive recalled.
This year's summit drew 1,600 attendees, slightly more than in 2023, when China was emerging from its pandemic response. But only about a fifth of attendees were Western executives, and there were few CEOs of global companies. The highest-ranking foreign politicians were Polish President Duda and Vietnamese Prime Minister Minh Chinh.
“There are more foreigners than last year, but not so many Westerners,” said Zhu Ning, China head at Brunswick Group Inc. “People are cautiously optimistic about this year's prospects, but the long term is uncertain,” he said of China's economy and business environment.
The agenda included topics such as artificial intelligence and climate change, but discussions on the sidelines of the meeting focused on the economy and the EU's recent decision to increase tariffs on Chinese-made electric cars by up to nearly 50 percent.
Li pushed back against criticism that China's production of new energy products was distorting trade, saying exports of EVs and lithium batteries were “enriching supplies in the international market”.
Speaking privately, he said he was there to hear companies' complaints and tried to persuade skeptical foreign companies, including introducing investors to China's commerce minister.
Foreign companies including Coca-Cola, Exxon and Swiss-based recruitment firm Adecco Group made presentations to the prime minister at the closed-door meeting, according to one of the attendees.
Li's day-long stay in Dalian was in stark contrast to his visit to the China Development Forum in March, China's largest event for foreign executives, where he departed after delivering a keynote speech, breaking with the customary practice of meeting informally with business leaders.
A government-backed “Invest in China” event was held in Beijing this week to promote successful foreign investments such as Airbus, BMW, Intel and Novo Nordisk, the Danish pharmaceutical company behind the weight-loss drug Wegobee, which was approved for sale in China this week. “Investing in China is investing in the future,” the CCTV report said, highlighting government support for these projects.
There were signs that the charm offensive was resonating in parts of Europe.
During a recent visit, German Vice Chancellor Robert Harbeck, a big investor in China's auto industry and critical of the EU's move to impose tariffs, said the “door is open for discussion” on the tariffs.
On Wednesday, he appeared to go further, saying the European Commission must be prepared to resolve the tariff dispute “politically.”
One solution could be a sliding scale that gradually reduces tariffs the more Chinese companies localize production in Europe, said an executive at a European automaker in Dalian, speaking on condition of anonymity.
That would buy European companies time to prepare for Chinese competition and encourage Chinese investors to create jobs on the continent — much like Beijing demanded when foreign automakers entered the Chinese market decades ago.
“Let's get a win-win situation out of this,” the executive said.
Another big topic at the side event was the US presidential election and what the outcome might mean for US-China relations.
“The political cycle in the U.S. and Europe combined with fears from the pandemic are creating sentiment of protectionism and isolationism,” said David Adelman, managing director at Crane Funds Advisors in New York and a former U.S. ambassador to Singapore.
He said the US election would feature “a lot of anti-China rhetoric” but that “smart people around both candidates understand that the US and Chinese economies are interdependent and that in the long run, Americans benefit from globalisation.”
Concerns about China's compliance with U.S. sanctions related to the war in Ukraine have also made U.S. investors more reluctant.
“There's a lot of capital sitting on the sidelines looking to invest in China,” Fan Kunsheng, head of China at Lazard Asset Management, said during a panel discussion.
Many investors privately expect China's economic growth to remain “dual growth,” with exports offsetting shaky domestic demand. Investors will also be keeping an eye on the Third Plenary Session in July, the five-yearly meeting where China's leaders lay out their medium-term economic policies.
Eswar Prasad, a trade policy professor at Cornell University, said Premier Li Keqiang's Dalian speech “hit the right spot on about addressing the symptoms and root causes of China's economic slump, but offered few concrete solutions.”
The prime minister “did not directly address investor and analyst concerns about worsening problems in the real estate market and other sectors of the economy, or the apparent change in the government's attitude towards private companies,” Prasad added.
Additional reporting by Wenjie Ding and Nian Liu in Beijing
