President Xi Jinping has been making all the right noises. Among his more heartening messages has been his reassurance that foreign investors and multinationals will be treated fairly, on a more level playing field.
His remarks came during a meeting at the Boao Forum for Asia this week with foreign corporate executives, who complained about red tape and a souring business environment on the mainland. In recent years, top foreign CEOs, such as Jeff Immelt of General Electric, have warned that China is increasingly hostile to foreign multinationals and lets them in only to learn their trade or industrial secrets and know-how. Many are especially upset about long-standing preferential state support for Chinese companies.
Xi said the turbo-charged rates of growth in the past two decades were unsustainable and that lower growth rates under a more consumer-oriented economy are not only realistic but desirable. The nation, he says, must also offer better protection for the lawful interests of foreign companies. That must be music to many foreign investors, who have long salivated over those one billion potential consumers on the mainland.
Part of the reason Xi finds the foreign executives persuasive may be that they are essentially arguing the same or similar points made by the more liberal and reform-minded cadres within the government and various official think tanks. Promote transparency and fairness; strengthen the rule of law, especially with contracts and intellectual property rights; encourage foreign investment by opening more sectors of the economy dominated by state-run enterprises; reform the business administrative systems to reduce red tape and corruption. These are the same arguments made by many reformers on the mainland.
To those complaints must be added many foreign investors' fears about periodic but unpredictable hostility from the central government itself. In recent years, Australian miner Rio Tinto, Google and Apple have found themselves at the receiving end. The row over the East China Sea last year inflamed nationalism and caused boycotts and vandalism against Japanese commercial interests in several major Chinese cities.
Foreign investment plays a key role in enhancing China's modernisation, productivity and competitiveness. Xi understands this. It remains to be seen whether he will make the necessary reforms.