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A2 UP FRONT
Friday 29 december 2023

U.S. companies are picky about investing in China.

The exceptions? Burgers and lattes

Continued from Front shoring Institute, noted that
decisions to expand or re-
And Starbucks invested $220 trench are relatively easy for
million in a manufacturing and a company like McDonald’s
distribution facility in eastern or its fast-food rivals.
China, its biggest project out- China’s vast market is vital
side the U.S. for many foreign companies:
This is surely not what Chinese At their annual investors day
President Xi Jinping had in gathering this month, McDon-
mind as he made the case ald’s executives noted that
to American CEOs about the 70 million of the 150 million
upside of China’s “super-large customers active in its cus-
market” last month while he tomer loyalty program are
was in San Francisco for a in China.
summit of world leaders. The KFC China says growth in its
investments in fast food and new outlets has averaged
other consumer goods, while more than 22% over the last
Washington is curbing exports five years, and it plans to open
of computer chips and other 1,200 additional stores in the
advanced technology, don’t next three years. The chain
fit into China’s own blueprint Popeyes Louisiana Kitchen re-
for modernizing its economy. Shopper stand watch as people visit an Apple Store at an outdoor shopping mall in Beijing on launched its brand in China
“As you try to interpret the Saturday, Dec. 23, 2023. in August with a flagship res-
signals from McDonald’s and Associated Press taurant in Shanghai and plans
Starbucks” and other chains, to open 1,700 stores over the
says Phil Levy, chief economist and opportunities for win-win ket’s long-term potential,” The relationship appears to next 10 years.
at the supply chain manage- cooperation.” McDonald’s CEO Chris Kem- be stabilizing somewhat as But for all the promise of Chi-
ment firm Flexport, “note what A survey released in Septem- pczinski said as the Chicago- 2023 winds down, highlighted na’s huge market, U.S. busi-
the industries are: These are ber by the U.S.-China Busi- based company announced by last month’s Biden and Xi nesses have other reasons to
not high-tech burgers.’’ ness Council, which repre- in November it was increasing meeting outside San Francis- think twice about expanding
And while some U.S. compa- sents American companies its minority 20% ownership of co. But since then, Biden’s top in China.
nies are increasing investments in China, suggested that its McDonald’s licensed stores advisers have said there are In July, the U.S. recommend-
in the world’s second-largest the uncertainty has taken a in China, Macau and Hong no plans to shift the strategy ed Americans reconsider
economy, overall foreign in- toll: 43% of its members said Kong to 48%. of tightening regulations and traveling to China because
vestment began falling this China’s business environment Burgers and lattes don’t raise blocking U.S.-based high-tech of arbitrary law enforcement
year. In the July-September had deteriorated in the past the sorts of friction that more investments in China, citing and exit bans and the risk of
quarter, net foreign direct in- year, and 83% said they were high-tech industries have in the need to safeguard na- wrongful detentions. Com-
vestment in China sank to a less optimistic about China the complicated U.S.-China tional security. merce Secretary Gina Rai-
deficit of $11.8 billion, the first than they had been three relationship. Those strains have Both former President Donald mondo has warned Chinese
quarterly deficit since Beijing years ago. Twenty-one per- persisted under the presiden- Trump, the 2024 GOP presi- leaders that U.S. businesses
began publishing the data cent said they were invest- cy of Joe Biden, who took dential front-runner, and Biden might stop investing in their
in 1998. As tensions simmer ing fewer resources in China, office vowing to do more to have worried about depend- country if they do not address
between China and its West- versus just 10% who were in- counter China’s expanding ing on China, a potential ad- complaints about worsen-
ern trading partners, many vesting more. military clout and its menacing versary, for supplies of criti- ing conditions due to raids
multinational companies are Surveys of European and of neighbors, to improve the cal materials used in many on firms, unexplained fines
shifting investments to other Japanese companies have country’s treatment of Uyghur high-tech products. Both have and unpredictable official
places, such as Southeast Asia shown similar results. and other ethnic minorities, sought to reduce America’s behavior.
or India, or repatriating their While China’s market is gigan- and to crack down on intel- reliance on Chinese facto- While insisting that China is
earnings. That has sapped tic, it’s ailing. Unemployment lectual property theft. ries and have encouraged keen to have foreign invest-
China of a key engine when among young Chinese rose Relations hit a low point in companies to shift away from ment, Beijing has given no
its economy has yet to fully to over 20% by June, the last February when Biden ordered China to other countries — indication it might change
recover from the disruptions of time the government released a Chinese spy balloon that so-called “friend-shoring.” trade, market access and
the pandemic and a property that data. Housing prices are traversed the continental Still, Biden administration of- other policies that irk Wash-
industry crisis that has been falling and the stock market United States to be shot ficials have said they don’t ington and its other trading
a drag on growth. is down nearly 15% since the down. Beijing, which claims want to see a total decou- partners.
Beijing puts some of the blame summer. That’s left many Chi- self-governed Taiwan as its pling of the world’s two big- “Where do you draw the
on U.S. government policies. nese feeling nervous about own territory, also protested gest economies. line?’’ asked Levy, a former
Commerce Ministry spokes- spending. a stopover in the U.S. by the “De-risking, yes. Decoupling, White House economic ad-
person Shu Jueting said Still, bullishness for China as island’s president, Tsai Ing- no,” Nicholas Burns, the U.S. viser in George W. Bush’s
recently, “The U.S. side has other industries try to de-risk wen, earlier this year. China ambassador to China, said administration. “Someone
repeatedly politicized eco- and detangle from Beijing answered fresh U.S. controls at a recent event in Washing- might say: For sourcing sen-
nomic, trade and technology may be a profit-increasing on exports of advanced com- ton. “We want to continue a sitive computer chips, this has
issues and overstretched the strategy for the fast-food puter chips and the technol- major trade and investment to be done in a place I really
concept of security, abused industry. ogy to make them with limits relationship with China, just trust. … The other extreme is:
export control measures, and “We believe there is no better of its own on exports of vital not ... in the realm that might We’re OK selling them lattes
restricted trade and invest- time to simplify our structure, commodities like graphite, help them leapfrog over us and burgers. But where do
ment in China by its own given the tremendous oppor- gallium and germanium, all sometime in the next 10 years you draw the line for the stuff
enterprises, which is forcing tunity to capture increased metals used in making semi- in military technology.” in between — say, automo-
enterprises to give up oppor- demand and further benefit conductors, solar panels, mis- Rosemary Coates, executive tive parts? What about ball
tunities in the Chinese market from our fastest-growing mar- siles and radar. director of the nonprofit Re- bearings?’’q