World Economic Forum: Li Qiang boasts of China-tech breakthroughs if wary foreign firms can be swayed

Li’s invitation for foreign companies’ participation in tech and science sectors came as Beijing faces a major bottleneck in the development in these areas, including telecommunications, semiconductors and aircraft, as it deals with debilitating restrictions in an intense tech rivalry with Washington.

Li, who has been driving China’s economic policy since March, has also been repeating rhetoric to lure foreign investment to China as the country attempts to recover from its years-long zero-Covid policy.

Yet, foreign business representatives in the meeting with Li said they hoped to see further reassurances from the Chinese government.

Ralf Brandstaetter, CEO of German carmaker Volkswagen Group in China, said in the meeting that companies need more clarity on cross-border data transfers, and he asked how China plans to cooperate with Europe amid rising political tensions.

“As a globalised industry, the transformation of the automotive sector highly depends on the international exchange of personnel, data and knowledge. We, therefore, need more clarity on cross-border data transfers,” the executive said, according to Reuters. And he reportedly added: “What are the major considerations of China, and how will China cooperate with Europe in this regard?”

Michael Hart, president of the American Chamber of Commerce in China, said that while data protection is a cross-industry concern for its members, many companies face other deterring factors when considering investing in China.

“Companies are very pleased to hear that sort of macro-welcomeness. One of the questions though, is that there are still restrictions on certain types of investments. When we surveyed our members, they told us that they would be willing to invest more in China if industries weren’t restricted,” Hart said. “In some areas, like even financial services, which in theory is open, there’s still a long process to actually make this happen.”

Beijing made promises earlier this year to relax its entity list that prohibits foreign firms deemed “unreliable entities” from engaging in import, export and investment in China, as part of its confidence-boosting campaign to assure foreign investors that China would continue to open its market. But there have yet to be major changes announced in this area.

Meanwhile, Chinese companies may face further limitations in their access to foreign technology, while foreign companies could face increasing uncertainties regarding investing in these areas in China, as the US and European governments insist that they need to “de-risk” their supply chain.

The European Economic Security Strategy, unveiled by Brussels last week and to be discussed further this week at an annual two-day summit, would potentially restrict autocratic governments’ access to European technologies that are seen as key to economic security, such as quantum computing and artificial intelligence.