AAPL Apple Inc

By Eva Dou and Josh Chin 

BEIJING -- Apple Inc.'s Tim Cook and Jon McNeill of Tesla Motors were among dozens of western executives who spent a long and unseasonably warm weekend here strolling the grounds where Mao Zedong once lived, surrounded by blooming magnolia trees and gliding swans.

The message they heard from top Chinese officials at the annual China Development Forum was as temperate as the weather: China remains open and eager for business, no matter the trade-war clouds that might be gathering.

"China will push for a higher level of economic opening-up," Vice Premier Zhang Gaoli said.

It was one of a string of speeches in which officials sought to cast China as a new leader for globalization at a time when the U.S. is expected to retreat from free trade and internationalism under the Donald Trump administration. The speeches are part of a broader charm offensive that is being met with cautious optimism by U.S. executives, some of whom question China's motives or willingness to follow through.

"We are obviously seeing very positive rhetoric for how China sees its potential future place in the economy," said Jake Parker, vice president of the U.S.-China Business Council, although he added that companies were hedging their bets until they saw concrete policy changes.

China also has been seeking to open lines of communication. Wang Qishan, a member of the ruling Politburo Standing Committee and a top ally of Chinese President Xi Jinping, gathered with a group of U.S. and European executives in a private meeting Monday, according to two people briefed on the matter.

And China's internet czar, Xu Lin, who has rarely appeared in public since his appointment last year, had a series of meetings in recent days with U.S. tech executives, including Mr. Cook, Apple's CEO. Chinese government agencies didn't immediately respond to requests for comment on the meetings attended by Messrs. Wang and Xu.

Mr. Cook, uncharacteristically formal in a tie, introduced Mr. Xu's closed-door speech on cybersecurity Monday in a villa of the Diaoyutai State Guesthouse, Chairman Mao's residence for a time. Among those present were the chairmen of Ericsson AB and Foxconn Technology Group, and Michelin's chief executive, according to participants. Mr. Xu also met individually with some companies, they said.

Mr. Xu's agency, the Cyberspace Administration of China, influences areas ranging from online censorship to industrial policy. Since his promotion in June, he has held few known meetings with foreign tech executives. Several senior western diplomats said their requests for meetings with him have met with silence.

While western executives find the increased communications heartening, they are still skeptical about whether Beijing will follow through with promises to open up more sectors to foreign investment, some of the participants said.

In recent years, U.S. firms have had to partner with Chinese companies if they wanted access to certain sectors. One such joint venture was announced this weekend when International Business Machines said it would partner with China's Dalian Wanda Group in cloud computing, a sector that foreign companies can't operate directly in China. IBM said that Wanda would deploy data centers across China driven by IBM technology.

Other U.S. companies also showed support for China over the weekend, with Apple announcing two new research centers in the country. Microsoft said Tuesday it expected to soon begin sales of a Chinese government version of Windows 10 modified to meet Beijing's security needs.

Ericsson Chairman Leif Johansson said some sectors such as automotives were opening up to foreign investment more slowly than hoped, but that the general direction was positive.

Mr. Trump's calls for an "America First" economic policy has put Chinese officials on their heels as they try to figure out Washington's plan and how to respond. China's Foreign Ministry has granted greater access to foreign media, and Beijing officials who were previously rarely accessible have sought out meetings with western executives.

"I think the Trump effect is real, and it's changed the conversation," said James McGregor, China chairman for APCO Worldwide, a communications and lobbying firm.

There are other factors that might explain China's new openness. Foreign companies' interest in the China market has started to wane at the same time Beijing is scrambling to stop domestic capital from moving overseas.

Foreign direct investment grew 4.1% in China last year, down from 6.4% in 2015, according to data provider Wind Financial Information.

In January, shortly after President Xi gave a speech at the World Economic Forum extolling the virtues of globalization, China's State Council issued a flier saying it planned to ease restrictions on foreign investment in certain areas of the economy, including finance, transportation and mining.

A senior Chinese official in charge of industrial policy, Miao Wei, surprised some in the foreign business community earlier this month by saying "adjustments" needed to be made to Made in China 2025, a multibillion-dollar plan to make China self-sufficient in strategic high-tech sectors like semiconductors and robotics. Foreign business groups had criticized the plan as a protectionist play that would skew the market.

But Mr. McGregor urged caution in accepting Beijing's overtures at face value.

"Now that there's global political pressure, China seems to pushing on opening up, but the openings are very clearly in areas where China needs help," he said. "Then businesses have to ask themselves, 'If I come in and help China, what happens five or 10 years down the road?'"

--Mark Magnier contributed to this article.

(END) Dow Jones Newswires

March 21, 2017 11:53 ET (15:53 GMT)

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