Xi's warm words jar with reality for foreign firms in China

Xi Jinping's message that China wants to roll out the red carpet for foreign businesses stands in stark contrast to the increasing difficulties many companies experience on the ground.

In written remarks Thursday to the APEC CEO Summit in San Francisco, the Chinese leader said his government would take more "heart-warming" measures to attract foreign nationals to the world's second-largest economy, which has struggled to regain its footing in the wake of the pandemic.

"Just as some leaders of the business community have said, China has become a synonym of the best investment destination, and that the next China' is still China," he told the economic forum.

Yet, the business climate has deteriorated markedly in recent years. The world's most stringent covid restrictions, investigations into foreign companies, and increased compliance risks due to sanctions and other restrictions from the US and Europe have all taken a toll.

A measure of foreign direct investment this month turned negative for the first time in 25 years, while a recent survey by the American Chamber of Commerce in Shanghai shows respondents are the gloomiest they've been on business outlook for decades.

"It may take more than some warm words to reverse the capital outflows," said Robert Carnell, regional head of research for Asia-Pacific at ING Groep NV. "Is this the beginning of a new more inviting and open China? I honestly have no idea but I wouldn't bet on it."