India-First-Global-Insights-Analysis -Sharing-PlatformIndia-First-Global-Insights-Analysis -Sharing-Platform

WEF in China: Separating business from politics?

, June 28, 2023, 0 Comments

wef-world-economic-forum-marketexpress-inThe World Economic Forum’s (wef) summer meeting is bringing together decision-makers in Tianjin, China. Alongside topics like AI and biotech, the conversation has focused on whether business can ignore political tensions.

On the way from Beijing to the port city of Tianjin, it is impossible not to notice all the greenery. Endless rows of young trees stand to the left and right of over 100 kilometers (62 miles) of highway.

Across the country, millions of trees have been planted as a way to help China achieve its environmental goals. And those efforts cannot be overlooked here.

Besides the six-lane highway, a high-speed train connects the capital and port. Numerous neighborhoods lie in between. Gigantic skyscrapers, a number of which are still under construction, reach out behind the trees.

A ‘Summer Davos’ in China

For three long years during the COVID-19 pandemic, China was almost completely isolated from the outside world. Now they are the hosts of what is known as the “Summer Davos” meeting. Colorful posters hang everywhere in Tianjin.

The 1,500 participants from China and around the world are supposed to feel welcome at the World Economic Forum’s (WEF) Annual Meeting of the New Champions.

It is already the 14th event of its kind organized by the Switzerland-based organization. For the past three years, the meetings were held online because of the pandemic and travel restrictions.

This week, the Chinese government is looking to send an important signal with this international conference. It even made visas for foreign participants relatively easy to get, at least by Chinese standards.

China on the lookout for investors

There are good reasons for China to want these kind of international visitors: The country is actively courting investors. Many company representatives and politicians have come to Tianjin. But most of the big names are missing. Still, the organizers are happy about a significant number of company representatives from the US. There are also a number of European and African participants.

“The US and China account for 50% of world trade,” emphasized Borge Brende, president of the World Economic Forum. That’s why it is so important to facilitate direct, personal exchange, he added.

To stress the idea of direct exchange, Chinese Premier Li Qiang’s opening speech was simultaneously translated into English, Japanese, Mongolian and Vietnamese. “The world economy is in a critical phase of upheaval,” he explained. “We should not return to isolation.”

China needs investors and open global markets to sell its products, especially since the its economy is growing more slowly than expected. In 2022, overall growth was forecast to come in at around 5.5%, but in the end the economy only grew by 3%.

Young people are finding it harder to get jobs. Experts estimate that every fifth young person entering the labor market here cannot find a job.

Waiting to see what happens

Chan Tran represents Linamar, a Canadian company that operates worldwide and has six production sites in China. Its approximately 2,000 employees in China work at sites that manufacture components for automobile production.

When asked about the current economic situation, the manager just shrugged his shoulders. When the company came to China in 2005, it looked like big growth was in its future. Now he fears stagnation.

“My company is a bit cautious with investments now,” said Chan Tran. To hedge their bets, the company will just wait for a while and see how things work out.

And like many Chinese participants here at the “Summer Davos,” he prefers not to talk about politics. Even Premier Li Qiang skirted the subject by speaking in very general terms, only mentioning the “intense political tension” that currently prevails. He didn’t say a word about Russia’s war in Ukraine or tensions surrounding the situation in Taiwan.

It seems as if the Chinese want to separate politics from business completely. It is a point that European and US participants, in particular, view critically. They talk about how they can reduce what they describe as the “China risk”  — that is, their dependency on the Chinese market — without giving up on the Chinese market altogether. But this is no easy task.

“We have politics hand-in-hand together with economics. You cannot disconnect the two,” said Frank Bournois from the Shanghai-based China Europe International Business School. Nevertheless, he is convinced that investments in China still make sense. “If we are going with decoupling, we would lose about 5% of growth worldwide.”

Keeping international communication open

Take cars, for example: China is still the most important market for German automobile manufacturers. The streets of Tianjin are full of VWs, BMWs, Audis and Porsches. But more and more Chinese vehicles are taking to the roads too. Increasingly they are electric vehicles, the majority of which are now entirely produced by Chinese manufacturers domestically, and without much external support.

The scramble for market share is getting tougher and it’s not just German carmakers that are feeling the effects.

That is why the World Economic Forum is trying to promote dialogue, despite ideological differences. Not everyone agrees with one another, but there are still representatives from 90 different countries here in Tianjin.

This showing demonstrates that the need for exchange exists, the event organizers argue. In small discussion groups, topics such as artificial intelligence, biotechnology and the market for healthcare are considered. “Seventy percent of [global] economic growth came from Asia last year,” was the comment made at a WEF press conference.

China is responsible for a large part for that — even if the growth is perhaps not as great as the Chinese government itself would have liked. The technologies of the future offer more potential for growth in China.

But there is perhaps one thing that has not gone quite as well at the “Summer Davos.” At the entrance to the conference venue, visitors are able to pick up a copy of writings by Chinese leader Xi Jinping. There are numerous volumes, printed on glossy paper. Up until now, however, the demand has not been huge.