China seeks to woo foreign firms as tensions with West swirl

© Reuters. FILE PHOTO: Chinese Premier Li Qiang speaks during a news conference following the closing session of the National People's Congress (NPC), at the Great Hall of the People, in Beijing, China March 13, 2023. REUTERS/Florence Lo/Pool

By Joe Cash and Shuyan Wang

BOAO, China (Reuters) -Chinese Premier Li Qiang said on Thursday that he was committed to opening up and reforming the world's second-largest economy, seeking to win over foreign investors even as trade and geopolitical tensions with the West loom large.

His keynote speech, delivered at a business and political summit in the island province of Hainan, came in a week Beijing has mounted a charm offensive on overseas firms as it seeks to shore up an economy battered by years of pandemic restrictions.

But the prospects for a speedy recovery are clouded by strained relations with the U.S. and its allies over issues including its cosy ties with Russia, muscular stance towards Taiwan and fears about its use of sensitive technologies.

"No matter what changes take place in the world, we will always adhere to reform and opening up...We will introduce a series of new measures in expanding market access and optimising the business environment," Li, who took office this month, told the panel at the annual Boao Forum.

"A confident, open, and willing to share China must be a huge force for world prosperity and stability," he said.

Li, who spoke alongside the prime ministers of Malaysia, Singapore and Spain, earlier this week told a group of foreign executives, including Apple Inc (NASDAQ:AAPL)'s Tim Cook, at a summit in Beijing that China was "unswervingly" committed to opening up.

In his maiden speech after he took office, Li pledged to ease a sweeping regulatory crackdown and support private enterprises. In a sign that stance may already be bearing fruit, Chinese e-commerce giant Alibaba (NYSE:BABA) Group announced this week it was planning to break up its empire and explore several fundraisings or listings.

But three years of rigid border controls and a series of sweeping lockdowns during the pandemic have sapped business confidence in China, especially among foreign firms, according to sentiment surveys.

Those COVID curbs were abruptly dropped in December, and Li said on Thursday there were signs a recovery was starting to take hold.

"Judging from the situation in March, it's better than in January and February. In particular, major economic indicators such as consumption and investment continue to improve, while employment and prices are generally stable," Li said.

China has set itself a modest target for gross domestic product growth of around 5% this year, after significantly missing its target for 2022. That is lower than what the International Monetary Fund and some private forecasters think it can achieve.

For some at the conference, Li's message to business did not go unnoticed.

"I see a lot more determination in conveying the message that China is indeed back open for business," said Denis Depoux, global managing director at consultancy Roland Berger.

'CHAOS AND CONFLICTS'

But there were also cautionary notes.

In veiled comments aimed at the United States, which is working with its allies to stymie China's access to advanced technologies such as microchips, Li said Beijing opposed trade protectionism and decoupling.

Speaking on the same panel, Spanish Prime Minister Pedro Sanchez said protectionism would represent "a return to the past" and damage relations between China and Europe.

But hours after his speech, the European Commission said it was examining measures to control outbound investment to prevent certain sensitive technologies going to rivals such as China.

Li's attempt to win over business also comes at a time of fierce rhetoric with the United States, its biggest export market.

Taiwan, the democratically ruled island that China claims as its territory, has been a particular bone of contention.

In the latest escalation, Taiwan President Tsai Ing-wen arrived in New York on Wednesday for the first of two U.S stopovers that Beijing has called provocative.

In his speech, Li said "chaos and conflicts" must not happen in Asia and that China would act as an "anchor" for global peace.