China’s US trade war charm offensive was meant to stop foreign investors from leaving, but is it working?

Insiders say Xi Jinping chose non-confrontational language to avoid ‘trap’ of lashing out at US businesses set by ‘trade hawks in Washington’

But China faces uphill battle to hold on to foreign investors, with NBA crisis example of Beijing using economic clout to secure political goals

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The National Basketball Association’s (NBA) China marketing plan was upended after the Houston Rockets’ general manager tweeted a message supporting Hong Kong protesters. Pictured is an NBA promotional banner being removed in Shanghai on October 9. Photo: AFP

Published: 11:30pm, 30 Oct 2019Updated: 12:28am, 31 Oct 2019

When US President Donald Trump launched the trade war 16 months ago, there was a debate in Beijing over how China should respond.

One view was that the government should employ a tit-for-tat response to inflict pain on American businesses in China. The other argument was that instead of punishing foreign firms – particularly American ones – China should be nicer to them, to try and win them over to China’s side in the dispute.

Not wanting to appear weak, President Xi Jinping responded to Trump’s tariffs with duties of his own, but rhetorically, opted for a non-confrontational charm offensive, according to two sources informed on the policy debate.

Instead of punishing American businesses in China, Beijing has tried to comfort and reassure them, promising easier access to the vast Chinese market, a level playing field, and a restrained role for the state in daily economic activities.

If China were to punish US businesses, it will only help those trade hawks in Washington who are trying to decouple China from the rest of the world. China will certainly not step into that trap

Chinese government official

“If China were to punish US businesses, it will only help those trade hawks in Washington who are trying to decouple China from the rest of the world,” said one Chinese government official, who declined to be named as he is not authorised to speak to the media. “China will certainly not step into that trap.”