CEOs Wooing Xi: Elon Musk and Jane Fraser Lead the Way!

This week, top officials from Microsoft Corp., Citigroup Inc., Exxon Mobil Corp., and other major multinational companies are gathering in San Francisco to meet with Chinese President Xi Jinping and other Asian leaders. Despite some slight improvements, the previously strained relations between the US and China remain uncertain.

For many companies, the agenda is simple: they are ready to get back to business.

The CEO summit held in connection with the Asia-Pacific Economic Cooperation meeting coincides with the most challenging business climate of a generation. Washington is trying to prevent China from acquiring high-end computer chips and has restricted US investment there. Beijing has responded by launching its own chip operations and urging citizens to buy locally made phones and other products. From technology to logistics, oil and gas to finance, companies are struggling to maintain access to Chinese consumers even as they try to navigate a growing list of regulations, tariffs and export restrictions.

The summit is scheduled to be attended by the biggest names in American business life, including Citigroup’s Jane Fraser, Exxon’s Darren Woods, Microsoft’s Satya Nadella and Tesla Inc., and SpaceX’s Elon Musk. Several leaders have been invited to dine with Xi, according to people familiar with the plans, an opportunity to air their concerns and goals in a less formal setting.

“If Xi is going to meet these business leaders at this summit, they will be looking for signs that the US-China relationship is thawing,” said Dan Prud’homme, associate professor of business at Florida International University.

Founded in 1989, APEC was established to promote free and fair trade as China began its historic economic opening under the leadership of Deng Xiaoping. APEC meetings rarely lead to breakthroughs or even an agreement. Still, the San Francisco gathering is the first time the United States has hosted the event in 12 years and offers a widely welcomed opportunity for President Joe Biden and Xi to meet face-to-face.

“What we’re trying to do is change the relationship for the better,” Biden told reporters Tuesday at the White House, shortly before leaving for San Francisco, where he is scheduled to meet with Xi on Wednesday. Biden said he believes the Chinese are in “economic trouble right now.”

Possible melting

In recent months, high-level officials from both countries have met several times to lay the groundwork for the first summit within a year. In one sign of a possible thaw, China’s government is considering announcing a deal to buy Boeing Co’s 737 Max jet during APEC, according to people familiar with the situation. Xi is not expected to announce a formal order for the plane, the people said. But the deal would be a major breakthrough for Boeing, which has been largely shut out of the Chinese market in recent years. In another development, China last week bought more than 3 million tons of soybeans from the United States, a goodwill gesture, according to people familiar with the matter.

“Both sides have now decided to slam on the brakes and try to add stability to an otherwise deteriorating situation,” said Evan Medeiros, who was President Barack Obama’s top Asia adviser and is now chairman of the Penner family in Asia. Studying at Georgetown University.

For business leaders, APEC is an opportunity to burp, push their agenda and talk about the state of the world. Musk is scheduled to join Salesforce Inc. CEO Marc Benioff for a “Conversations on the Future” session. Exxon CEO Woods plans to deliver a speech entitled “Reframing the Climate Challenge: Keep Energy, Curb Emissions.”

The hottest ticket is the Xi dinner, and leaders are clamoring for seats or waiting lists, according to people familiar with the situation. China’s president is under pressure to reassure leaders that his nation is very open for business and is making progress in its efforts to revive the economy. His guests are happy to tell him that they still see China as a vital market, despite Washington’s efforts to build barriers around sensitive technologies.

Some companies are more directly affected than others by Beijing’s crackdown on foreign companies, and few more than Apple Inc., which generates about a fifth of its revenue from the region and makes most of its devices there. Apple’s sales in China slowed in the last quarter, and it faces growing competition from Huawei Technologies Co. Bloomberg and other media have reported that Beijing has restricted the use of iPhones and other foreign technology in agencies and state-backed companies. Government officials have denied this.

Although Tim Cook will not attend APEC – instead sending a mid-level government official – the Apple CEO visited Beijing last month. He met with Commerce Minister Wang Wentao, who told him that China welcomes Apple and other multinationals.

San Francisco is emerging as a major hub for artificial intelligence, and technology is very much on the minds of attendees. Officials around the world have expressed concern about the potential dangers of artificial intelligence, even as the United States and China compete to dominate the dawning era of chatbots and content creators. Last month, Biden proposed in an executive order to regulate cloud computing power for foreign entities, which is used to feed data into software models that generate artificial intelligence content.

Microsoft has added generative AI to all of its major products, and Nadella is scheduled to talk about the technology in a keynote speech on Wednesday. “Now is the time to have a conversation about the central role of AI breakthroughs in shaping the global economy,” Ahmed Mazhari, head of Microsoft Asia, said in a statement. Google, which is sending several executives, plans to explain why its AI products are a good fit for the Asian market.

While many of the mutual trade restrictions target companies whose products have national security implications, Florida International University’s Prud’homme points out that many companies participating in APEC do not manufacture products that can be used for military purposes. “They are somewhat off the radar of the U.S. government’s national security system,” he said. “And they want to reassure their Chinese counterparts that they are in sectors that should not be affected by the current political tensions.”

Petrochemical plant

Exxon is an example. After receiving approval to build a multi-billion dollar petrochemical plant in Guangdong province, the company aims to be a key supplier to the country’s manufacturing industry for decades to come.

Meta Platforms Inc.’s social media apps Facebook, Instagram and WhatsApp have been blocked in parts of Asia for years, particularly in China. But the company is increasingly dependent on the region to make virtual reality headsets and smart glasses. During APEC, Meta’s leaders seek to strengthen relationships with government officials and manufacturers in Asia that can enable or hinder its growth.

It is true that there is a risk for US companies to establish close relations with China. The country has drawn international ire for its treatment of the Uyghur minority, restrictions on civil liberties and increased military aggression against Taiwan.

Apple is regularly criticized for the concessions it has made to operate in China. The company partnered with a government-linked company to beef up iCloud, raising concerns that Beijing could gain access to data stored on users’ Apple accounts – a claim Apple has denied. It has removed apps from the local version of the App Store if Beijing objects to them, and has agreed not to use such digital services as Apple TV, the iTunes Store and Apple Arcade.

Musk, whose Tesla has a factory in Shanghai, has also been criticized for cozying up to Beijing. He caused an international uproar last year when he suggested the world treat Taiwan as a special administrative region like Hong Kong.

Most executives refrain from openly criticizing Beijing, but FedEx Corp. chairman and founder Fred Smith recently told an energy conference that China is “going to be mercantilist, protectionist and [has] a geopolitical goal to become a hegemon.”

Smith will not attend APEC. But his successor as chief executive, Raj Subramaniam, will be there and is expected to echo his mentor’s long-standing claim that more trade promotes economic growth, creates wealth and spreads peace.