US business titans flock to China despite fraying ties

From Elon Musk to Bill Gates and Apple's Tim Cook, some of the United States' biggest business titans have headed to Beijing, seemingly defying the barrage of doomsayer narratives around the US-China trade war.

The stream of visits by some of the world's richest men began after China abruptly ended nearly three years of Covid isolation late last year.

In Beijing, the American magnates have talked up their optimism about China's vast market and trade ties between the world's two largest economies.

Landing in China in late May, Tesla owner Musk reportedly said that Beijing and Washington's interests were "intertwined, like conjoined twins, who are inseparable from each other".

Apple CEO Cook also spoke of his firm's "symbiotic" relationship with China -- home to the world's largest iPhone factory.

The biggest honour of all -- a meeting on Friday with Xi Jinping -- was reserved for Gates, whom the Chinese leader hailed as "our old friend", according to the state-run People's Daily.

The visits come as US-China trade tensions deepen, and after trade between the two countries reached a record $690.6 billion last year, according to the US Department of Commerce.

But businesses are worried about a slow in US exports to China, America's third-largest trading partner, with the drop strongly felt in the tech industry.

Citing national security concerns, the United States in 2022 blocked exports to China of the most advanced semiconductors and the equipment needed to make them.

China has hit back by vowing to accelerate its efforts to become self-reliant on semiconductors.

"China-US trade was... once mutually dependent and beneficial," analysts at the Peterson Institute for International Economics wrote in a recent paper. "US exports to China are one more channel through which the bilateral relationship continues to deteriorate."

The US government is engaged in high-stakes disputes with China over policy issues ranging from Taiwan to human rights, with no sign of tensions abating despite an upcoming visit to Beijing by US Secretary of State Antony Blinken.

US businesses in China have long been at the forefront of advocating for engagement, arguing that a strong economic relationship could spur reform. The visits by the magnates show just how embedded some of the world's biggest firms are in China, despite the political tensions.

With China growing more repressive under Xi, however, long-influential business lobbies are "increasingly a minority voice", according to Joe Mazur, an analyst at Trivium.

"The business community is one of the last remaining pieces of ballast that is stabilising the US-China relationship."

The business community in China will be closely watching Blinken's visit this weekend, which analysts say is unlikely to ease the confrontation.

"American business has substantial investments, thousands of employees, and still considers China a promising market," James Zimmerman, a Beijing-based former chairman of the American Chamber of Commerce in China, told AFP.

But the US and Chinese governments, he said, "have hollowed out any level of collaboration and there is little room for developing even a pretence of goodwill".

The US-China Business Council, long a key interlocutor between Beijing and Washington, feels left in the lurch, with its efforts against stricter trade curbs having failed to sway an increasingly hawkish Congress.

"They have to make the case for continued engagement with China when the received wisdom in Washington is that the moment of engagement has passed," Mazur said.

Recent moves by Beijing to restrict overseas access to data and raids on consulting firms' offices have also spooked foreign companies -- adding to a sense that doing business in China is increasingly not worth the risk.

"There's a shift in sentiment," said Claire Chu, a senior China analyst at defence intelligence company Janes.

Many companies may "wonder maybe, even if I don't exit, I should start thinking about it", Chu added.

"Dawn raids with little due process and the indefinite detention of employees without access to legal counsel has become the norm for both Chinese and foreign companies alike," Zimmerman said.

Many top manufacturers are openly recalibrating their reliance on China: both Apple and Tesla are looking to move some of their production out of the country.

"Much the same way that people said 10 years ago that you need to be in China to be relevant, now relevance will depend upon a strategic reshoring exercise," Zimmerman added.