China’s vice-premier Liu He privately met a group of top corporate executives in Davos to tell them that the world’s second-largest economy was back, in an effort to rekindle economic ties damaged by the pandemic and tensions with the US.
Executives at the lunch said Liu’s message had fuelled renewed optimism about the prospects for the Chinese economy, which has been battered by Beijing’s recently abandoned “zero-Covid” policy, a property slump and a regulatory crackdown on the tech sector.
But analysts cautioned it was unclear whether Beijing would follow through on the picture of openness and reform offered by Liu, who is China’s top economic official but is expected to leave the government this year.
Guests at the lunch, which followed Liu’s address to the World Economic Forum on Tuesday, included Stephen Schwarzman, founder of US private equity group Blackstone, Cisco chief Chuck Robbins, Qualcomm head Cristiano Amon and the boss of Intel, Pat Gelsinger, according to people with direct knowledge of the meeting.
Stéphane Bancel, chief executive of Covid vaccine maker Moderna, Nestlé head Mark Schneider and Martin Brudermüller of German chemicals maker BASF were also invited.
One person attending, who declined to be named because of the confidential nature of the discussions, said the message was “China is back”.
“It was very much like 2017,” the person said, referring to Xi Jinping’s trip to Davos, during which the Chinese leader defended globalisation.
Another said it was clear that Liu, Xi’s closest economics adviser, had been sent to Davos “to reconnect” with the west. A third described Liu’s responses as “frank” and said the meeting was “part of a charm offensive”.
“They are reversing everything that has been done in the last three years,” said one attendee. “They will be business-friendly and [know] that the economy cannot be successful without the private sector.”
The war in Ukraine was not discussed, several attendees said.
Liu’s speech to the forum, the private lunch and the upbeat assessment of executives in attendance fed into a sense of renewed optimism on the Chinese economy, following Beijing’s decision to finally drop its zero-Covid policy this month.
Liu, who is past the retirement age of 68 for party officials and is expected to step down from his post as vice-premier this year, met US Treasury secretary Janet Yellen in Zurich on Wednesday. The encounter — the first between the top US and Chinese economic officials since president Joe Biden came to office — is seen as a further sign that Beijing and Washington are seeking to reduce tensions.
“Foreign investments are welcome in China and the door to China will only open up further,” Liu told the WEF in his speech on Tuesday. He added that the Chinese economy would “see a significant improvement in 2023”.
In an apparent effort to demonstrate greater openness, Beijing’s securities regulator on Thursday gave JPMorgan approval to take full ownership of its China mutual fund venture and allowed the Hong Kong unit of Standard Chartered to set up a fully owned securities unit in mainland China.
While welcoming Liu’s overtures, analysts expressed caution as to whether substantive action would follow.
Rana Mitter, professor of the history and politics of modern China at Oxford university, said Chinese officials had a habit of coming to Davos with promises of reforms.
“Xi’s political project is still very much in place. Businesses in China will be further entwined with the party and will still be expected to adapt their corporate messages to the narrative of China’s rise in the world,” Mitter said.
Mark Williams, chief Asia economist at Capital Economics, said: “People keep looking to Liu He as a standard bearer for economic reform. Meanwhile, the years in which Liu has operated as Xi’s right-hand-man on the economy have seen market freedoms significantly rolled back.”
However, an attendee of the lunch parried those concerns.
“This is real,” they said. “When China changes its mind everyone lines up. There are no accidents in communication from China.”
Additional reporting by Tom Mitchell in Singapore and Yuan Yang in London