U.S. Corporate Titans to Meet China’s Leader Despite Hacking Claims

Corporate America has an increasingly delicate relationship with China. Company chiefs are flirting outrageously in the hopes of winning greater access for their products, while also fearing the disapproving gaze over their shoulder of their U.S. government chaperones.

The position could not be clearer this week. CEOs who have traveled to Beijing for the China Development Forum, which took place on Sunday and Monday, are being forced to reschedule their private-jet departures after a sudden invitation to meet with Chinese President Xi Jinping on Wednesday.

High-level access doesn’t get better than that. But the meeting, if it occurs, comes at the same time that both the United States and the United Kingdom have accused China of coordinated cyberattacks by elite Chinese hacking units, attempting to place malware in the U.S. electricity grid, defense systems and other critical infrastructure, and compromise the devices of critics.

All British Voter Names Stolen

In Britain, the government says the personal details of all registered voters between 2014 and 2022 have been hacked, the names and addresses of some 40 million people, while the Chinese teams also targeted “spear phishing” attacks on China hawks such as Iain Duncan Smith, who previously led the Conservative Party. Both countries announced sanctions against two people, Zhao Guangzong and Ni Gaobin, and the tech company they work for, a company that Western officials say is a front for the Chinese ministry of state security, its top spy agency.

Wednesday’s corporate meeting with Xi, if it proceeds, would provide unrivalled access to the key decisionmaker driving Chinese policy. China has used the forum in Beijing to beat the drum that it wants to encourage multinational investment into its economy, which has flagged from its normal breakneck pace. Foreign direct investment into China shrank by 8% last year.

The Chinese premier normally headlines the forum and gives a briefing to international CEOs at the end of the event, a rare opportunity for executives to mingle with policymakers. But current Premier Li Qiang, who gave the keynote address, did not hold that meeting this year. Similarly, the premier did not give a news conference at the end of the annual session of China’s congress earlier this month.

Xi, who at his own bidding is dubbed the “core” of the Chinese Communist Party, stands alone at China’s summit. Wednesday’s meeting is officially only with a top Chinese leader, with Xi’s name not on the invite. But there’s an understanding that he will attend. It’s a follow-up to the business dinner he held with executives in San Francisco in November, when CEOs forked out US$40,000 per head for a seat at Xi’s table. The invites have been set up in a similar way to last November’s meal on the sidelines of the APEC summit.

Stronger U.S. Presence Than After Spy Balloon

This year’s forum in Beijing has drawn much stronger attendance from U.S. corporate leaders than last year’s event, which many American CEOs chose to skip after the U.S. Air Force shot down what it claimed was a Chinese spy balloon off the coast of South Carolina.

Now, despite a congressional inquiry into the super-popular Chinese-owned app TikTok, the U.S. attendees are back with a vengeance.

CEOs including Tim Cook from Apple AAPL, Stephen Schwarzman from Blackstone BX, Evan Greenberg from Chubb CB, Raj Subramaniam from FedEx FDX, Albert Bourla from Pfizer PFE and Ryan McInerney from Visa V are in town for the forum.

There’s little to lose for services companies such as financial institutions or restaurant chains in terms of petitioning for greater access to the Chinese market. But for tech companies such as Broadcom AVGO, whose CEO Hock Tan is among the forum delegates, the ground is rockier, the politics harder to traverse. Broadcom generates around one-third of its sales in China, one of the highest proportions among American corporations. Likewise, Micron Technology MU gets one-quarter of sales in China, with CEO Sanjay Mehrotra also attending the forum alongside Qualcomm QCOM CEO Cristiano Amon and Lisa Su of Advanced Micro Devices AMD.

It’s in those chip industries that battle lines are being drawn. China has reportedly introduced new guidelines to phase out the use of chips from AMD and Intel INTC from government computers, to be replaced with local equivalents. Washington, meanwhile, is blocking off the flow of high-end chips from the likes of Micron and Nvidia NVDA into China.

Companies will likely use the meeting with Xi to stress the importance of stability in U.S.-China relations. China also urged multinationals to set up research and development centers in China, and to partner with local companies, although the issue of corporate intellectual-property theft has long blighted Sino-U.S. relations. And there has been little specific detail on sweeteners that would attract greater investment into China, just as Beijing officials have given scant information on how they hope to stimulate the world’s second-largest economy.

The public allegations from Britain and the United States over Chinese state-sponsored hacking are clearly designed to increase the pressure on China at a time both nations will be heading toward national elections. To date, both Britain and the United States have resisted “naming names” when announcing cyber intrusions. That stance is changing, a firmer tone that adds tension to what will presumably be a welcoming environment when Xi meets the American CEOs, who gave the Chinese leader a standing ovation at that dinner late last year.