Why Global CEOs Are Still Bullish on China

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Multinational corporations from the U.S., Europe, Japan and Korea continue to pump billions of investment dollars into China despite its slowing economy and the protracted U.S.-China trade war.

So says Bloomberg in a report this week noting that foreign direct investment into China rose nearly 3% in the first nine months of 2019 from a year earlier, according to China’s Ministry of Commerce. That’s about the same pace as China’s inbound FDI growth for 2018.

Chinese FDI figures are fiendishly difficult to parse because it’s almost impossible to tease out how much investment comes from outside China and how much is “round-tripping”—Chinese companies moving money offshore and then redirecting it to the mainland to take advantage of tax breaks and other incentives. As Bloomberg duly notes, about three quarters of China’s FDI in 2018 was routed through Hong Kong, the British Virgin Islands or the Cayman Islands, destinations a recent International Monetary Fund report dubbed channels of “phantom FDI.”

Even so, Bloomberg concludes China’s continued FDI growth is real, citing big investment commitments by firms including Tesla, Walmart, General Electric, LG Chem, and BASF.

Those investments defy President Trump’s August decree that American companies must “immediately start looking for an alternative to China.” Bloomberg‘s take: never mind the bickering between Washington and Beijing; for big multinationals, “the rising spending power of 1.4 billion people” is simply “too hard to resist.”

Beijing has sought to counter trade frictions with the U.S. by stepping up its appeals to global companies. At the second annual China International Import Expo in Shanghai last week, Chinese president Xi Jinping styled himself as a champion of globalization and free trade while indirectly rebuking Trump’s unilateralism. “Economic globalization is a historical trend,” Xi said. “Although there are sometimes some waves going backward, and even though there are many shoals, the rivers are rushing forward and no one can stop them.”

At a “Multinational Summit” in the eastern Chinese city of Qingdao last month, Xi vowed to fling open China’s market to companies from around the world. “The door of China’s opening up will only open wider and wider, the business environment will only get better and better, and the opportunities for global multinational companies will only be more and more,” he said in a letter read out by vice premier Han Zheng.

But if the world’s business leaders remain eager to capitalize on those opportunities, many of its political leaders seem ever more leery of being perceived as too cozy with Beijing. The latest example of that divergence: Bloomberg‘s billionaire founder Michael Bloomberg, whose company is heavily invested in the world’s second-largest economy and has worked relentlessly to recruit global CEOs to join a high-profile “New Economy Forum” to promote cooperation with China.

The Bloomberg conference will be held next week in Beijing. But last week Bloomberg morphed from executive to politician, signaling his intent to challenge Trump in the next presidential election as the Democratic party’s nominee. On Friday, Reuters reported that Bloomberg will not attend the Bloomberg event.

More China news below.

Clay Chandler
@claychandler
clay.chandler@fortune.com

Economy and Trade

Chicken coup. China lifted a 4-year ban on imports of U.S. chickens Thursday, which the U.S. Trade Representative says will lead to an extra $1 billion dollars in annual sales. Beijing banned U.S. poultry imports in 2015 following an avian flu outbreak. Opening up the chicken trade could contribute towards the $50 billion of agricultural imports the U.S. wants China to agree to as part of its phase 1 deal but it will also help China make up for its plummeting pig stocks, which have been decimated by African Swine Fever. Wall Street Journal

Where is Xi? Xi Jinping was in Athens earlier this week, where he and the Greek president agreed to push ahead with Chinese shipping giant COSCO’s $661 million expansion plan for the Port of Piraeus—Greek’s largest port, which COSCO already owns. Then, it was onto Brazil and the BRICS summit. Brazilian president Jair Bolsonaro, who spoke a tough game against China during Brazil’s election season, appears to have soften on China, which he said is becoming increasingly part of Brazil’s future. South China Morning Post

Liquid lunch. China’s central bank injected $28.6 billion—Rmb200 billion—into the market on Friday, marking the second time the People’s Bank of China (PBoC) has done intervened with cash injections this month. Last week, the PBoC supplied Rmb400 billion. Reuters

Innovation and Tech

Look to the skies. Shenzhen-based drone maker DJI is developing an app that will let users track any drone flying nearby. The free app is intended for the public—as opposed to DJI customers—and is being developed as lawmakers in the U.S. are lobbying for greater controls over drones, especially Chinese made ones. Reuters

Fighting together. The FDA approved a Chinese cancer treatment drug, developed by Beijing-based BeiGene Ltd., for the first time. China’s own national drug regulator has yet to approve the Brukinsa capsules offered by BeiGene. U.S. genetics giant Amgen Inc bought a 20.5% stake in BeiGene earlier this month for $2.7 billion to jointly develop cancer therapies. Bloomberg

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Politics and Policy

A week in Hong Kong. Schools and universities closed this week in Hong Kong as protests spilled over from the weekend, disrupting transport across the region. Some universities will remain closed until next semester—notably Chinese University Hong Kong (CUHK), where protesters fought a pitched battle against police Tuesday and barricaded the campus for four days. Foreign exchange students are being recalled by their home universities. The city’s central business district was disrupted by lunch-time protests as white-collar workers used their midday break to occupy roads; police responded with tear gas and many banking offices have let their employees stay home. A number of major events, such as the Clockenflap music festival and the RISE tech conference, run by WebSummit, have cancelled due to the volatile situation, too. South China Morning Post

This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.