China's Xi Jinping offers to shield foreign investors in new round of charm offensive

China's President Xi Jinping has pledged to safeguard foreign investors, intensifying the government's efforts to address economic concerns and unpredictable policymaking that puts the country at risk of losing its shine among overseas companies while it is also embroiled in political tiffs with the West.

“Development is the top priority of the Communist Party of China in governing and rejuvenating the country,” Xi told New Zealand Prime Minister Chris Hipkins during his official visit to Beijing on Tuesday.

According to Xi, "We will continue to vigorously promote high-level opening up and better protect the rights and interests of foreign investors per the law," as reported by the official Xinhua News Agency.

Chinese local officials are in need of foreign investment due to depleted funds resulting from years of pandemic spending and a tumultuous property market. However, they have faced challenges in attracting funds as investors remain cautious about the economy and the possibility of unexpected policy shifts.

The appetite for investment has further weakened by a crackdown on foreign consultancy firms that assist global investors and multinational corporations in understanding China. This campaign was followed by sudden regulatory tightening efforts affecting various industries, ranging from technology to real estate, which led to foreign capital fleeing the nation's financial markets.

More and more foreign companies are relocating investments and their Asian headquarters away from China, reflecting a decline in confidence due to the expansion of an anti-spying law and other challenges faced by businesses operating in China.

A report by the European Union Chamber of Commerce in China had earlier pointed out that companies are uneasy about security controls, the government's protection of Chinese rivals, and the lack of progress on promised reforms. Moreover, slowing economic growth in China and rising costs are further squeezing businesses.

Additionally, the US and its European allies are seeking to reduce their reliance on China in their supply chains in order to mitigate risks and "de-risk" their economies.

Chinese Premier Li Qiang has warned against governments attempting to politicise their economies, highlighting that such efforts would only fragment the world as the US and Europe "de-risk" their supply chains from China.

Last week, Chinese Premier Li Qiang acknowledged the legitimacy of de-risking during a discussion with CEOs on a trip to Germany, but suggested that it should be decided by business leaders rather than governments. He also cautioned against exaggerating risks, initiating a discussion on identifying what exactly poses a serious threat to national security.

China's rhetorical shift is the latest effort to counter the actions taken by the US and Europe to prevent the world's second-largest economy from accessing advanced technology. By attempting to create a divide between companies and their governments, China hopes to spark a debate in Western capitals that could ultimately dilute any proposed measures that would harm China's economy.

China has recently intensified its efforts to encourage foreign investors. At a "Summer Davos" dialogue in Tianjin, Li Qiang assured entrepreneurs from around the world that China is willing to collaborate with them, as reported by Xinhua.

Meanwhile, Bernard Arnault, the billionaire CEO of LVMH, is embarking on his first trip to China since the pandemic. The French entrepreneur was seen at a high-end shopping mall in Beijing on Tuesday, as reported by the Global Times, citing photos circulating on a social media platform.

In addition to meeting Xi Jinping, New Zealand PM Chris Hipkins also met Zhao Leji, the head of China's legislature, as part of his visit to the Asian nation this week. Hipkins emphasised that the primary focus of the visit was to strengthen the close economic relationship by supporting businesses in renewing connections with Chinese counterparts and fostering new partnerships to aid New Zealand's economic recovery, as stated in a post-meeting statement.