Xi’s Iron Grip Stifles Access for Foreigners Visiting China

Taking the pulse of China’s $18 trillion economy is getting tougher for foreign visitors who previously could count on holding informative meetings with key policy makers.

(Bloomberg) — Taking the pulse of China’s $18 trillion economy is getting tougher for foreign visitors who previously could count on holding informative meetings with key policy makers.  

While “old friends” such as Bill Gates and Henry Kissinger have gained access to the highest rungs of power in widely publicized visits this year, it’s been a different story for bankers, economists and businesspeople returning after three years of closed borders.

Accounts from more than a dozen people, some who asked not to be identified to speak freely, describe dinner invitations that were seen as potential ethics breaches and politely declined, silence around taboo topics such as deflation and bland party speak replacing the honest exchange of ideas. Once-familiar officials, they said, are now fearful of breaching newly broadened anti-espionage laws as President Xi Jinping grows more wary of the US and its allies. 

Cliff Kupchan, chairman of political risk consultancy Eurasia Group, said he was still able to meet with long-time contacts on his first trip since the pandemic in over three years, but they were more reticent about expressing their views or had shifted toward the official line. 

“The number of Xi Jinping quotes I got was far more than any previous trip,” he said. 

The deepening opacity — coming as China’s economic rebound falters — threatens to further undermine the already wavering confidence of foreign businesses and investors, rattled in part by a crackdown on consulting companies earlier this year. One gauge of foreign direct investment has slumped to the lowest level in 25 years and overseas funds aren’t buying into the stock market’s recent rally. 

China has in recent months limited overseas access to corporate data and academic journals while raiding firms selling access to experts — services that were frequently used by hedge funds and other global investors. It broadened the scope of anti-espionage laws in the spring, which along with state media coverage on guarding against spying has heightened suspicions among local officials. 

Read more: Why It’s So Hard for China to Shake Uninvestable Tag: QuickTake

Fresh Risks 

“I think it’s best understood as a shift in the cost-benefit balance of many Chinese experts in meeting with foreigners,” said Jeremy Daum, a senior fellow at the Paul Tsai China Center at Yale Law School who researches Chinese law. “Even though the risk may be very minimal, it isn’t zero, and if there isn’t a clear benefit in having the meeting, it’s easier to just pass.”

The people cited various reasons for the failure to hold useful meetings, including greater skepticism of the West, uncertainty over the new government’s policies and indifference due to poor morale within the bureaucracy. Investors said their contacts at financial institutions now tend to speak only in general terms, making it harder than ever to predict policy direction and put together forecasts. 

One senior executive at a global investment bank said he was suddenly unable to meet with officials from the People’s Bank of China as he had done on regular visits to Beijing over the past decade. The difficulties in access is leading to a much wider range of expectations from overseas investors, he said. 

Another banker at an international firm said they’ve found PBOC meetings unhelpful for the last six months. The person, who isn’t authorized to speak publicly, attributed this to a lack of policy direction at the highest levels rather than attempts to be obstructive. 

Keeping Secrets

State employees say that new training on keeping secrets and the revised anti-espionage law have dampened willingness to engage candidly with overseas visitors. Some hosts also cite the requirement to submit post-meeting reports as an added disincentive.  

An analyst who previously worked at a Chinese financial regulator said several people working in government institutions turned down a dinner request when he visited earlier this year, saying it could be sensitive or perceived as an ethics breach. A Western academic said he was denied a meeting with an employee at a state-owned bank, who cited guidelines on engaging with foreigners. 

Since an education campaign on Xi Jinping Thought was launched in April, employees at state and state-affiliated institutions have been required to write essays, take tests, and identify and address problems, according to an employee at a government-controlled institution who asked not to be named discussing internal policies. 

No one wants to make mistakes during this sensitive time, the employee said, adding they are required to do at least four hours of online course training on the Baomiguan — or “Views on Secret Keeping” — app and take a test until they can pass. 

Read more: China App Trains Government Workers on Keeping State Secrets

There may be another reason for the aloofness: Apathy. One Hong Kong-based banker at an international firm who met with mainland clients recently described those working in the financial sector as “lying flat” — or doing as little as possible — as slashed salaries, slowing economic growth and mandates from managers to cut back on risk meant there was little appetite to do anything at all.

Some analysts have been warned off certain topics entirely. Two economists told Bloomberg News that they have been instructed by regulators and their workplace to stay away from topics such as deflation in public, while one said he is only allowed to promote the narrative that China’s economy is steadily improving. 

‘Old Friends’

Still, as the high-profile visits of Gates, Kissinger and others have shown, the doors remain open to some visitors who authorities want to showcase.  

Former British trade secretary Peter Mandelson, a long-time friend of China who traveled to Beijing earlier this year, said he was able to meet a mix of state, government and party officials who were candid about their concerns around the economy. That frankness extended to geopolitical topics too. 

“I was quite surprised by one senior political figure telling me forthrightly that Russia is not an ally of China,” the chairman and co-founder of advisory firm Global Counsel LLP said. 

For some, just getting delegations into China has been a relief. 

“Seeing that people could go back, they could wander around, could act in ways that they had acted when they were there before, was very reassuring,” said Jan Berris, vice president at the National Committee on United States-China Relations, who led two delegations of scholars to China in July. 

Access seems to be variable, however, especially when the quality rather than number of meetings is considered.

“We’re not only getting less appointments than in the past, the language is always far more staged, far more copy-and-paste, and particularly in Beijing, it’s less interesting, less candid and more cautious,” said Joerg Wuttke, former president of the EU Chamber of Commerce in China. 

“They’re all worried about not toeing the right party line,“ he said, referring to central-level officials. “They’re worried about saying something which then might be used against them.”

–With assistance from Jing Li, Yujing Liu and Colum Murphy.

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