American CEOs used to swoon over China. Its vast pool of consumers has been a magnetic draw for decades. But doing business there has become so fraught and risky – with intellectual property theft and an expanded espionage law used to intimidate the business community – that U.S. companies have pressed the pause button.
On top of that, the U.S.-China relationship has become contentious due partly to Beijing’s belligerent activity toward Taiwan and in the South China Sea, the balloon spy incident of last year, and the list goes on.
Making matters worse, the Chinese economy has hit a wall: export growth is slowing, the country’s drowning in debt, and youth unemployment has soared.
Getting into China to tell that story is all but impossible for most Western journalists.
But when the U.S. ambassador, Nicholas Burns, invited us to come for a visit and an interview, we were granted visas. We spoke with him at his residence in Beijing.
Nicholas Burns: More money is leaving China for the first time in 40 years than is coming in from American, Japanese, European, Korean investors.
esley Stahl: Now why is that? And how much of a problem is that for them?
Nicholas Burns: That’s a real problem for this economy. They have 1.4 billion people here. They’ve gotta keep it growing, and foreign capital is important. You ask why. I think there’s been a contradiction in the messaging from the government here in China to the rest of the world. On the one hand, they say, “We’re open for business. We want American, Chi– Japanese businesses here.” But on the other hand, they’ve raided six or seven American businesses since last March.
Nicholas Burns: Raided. They’ve gone into American companies and shut them down and made accusations we believe are very much unwarranted.
The American companies include Bain & Company and— the Mintz Group, a company that does due diligence for other companies that might want to invest here, was raided last year. Five of its Chinese employees were taken into custody, and they’re still there.
Another firm, Capvision, was raided. Lest the message wasn’t loud and clear, a report about it was put on state-run television.
It accused Western consulting firms of espionage and stealing national security and military secrets.
Lesley Stahl: They want the investment to come back and they’re raiding American companies? And they’re–
Nicholas Burns: Yes. They’ve passed an amendment to their counter-espionage law and it’s written in such a general way that it could be that American business people could be accused of espionage for engaging in practices that are perfectly legal and acceptable everywhere else in the world– collecting data to do due diligence so that you can decide whether you want to invest in a company or form a joint venture, right?
Lesley Stahl: What do you think the Chinese are afraid that these companies are gonna find out, these due diligence companies? What are they worrying about?
Nicholas Burns: You know, I think they want to control data about the Chinese people, about Chinese companies. And so– that I think is at the heart of the problem with those American companies operating in that sphere.
Ambassador Burns told us that’s just one of the concerns he hears about.
Nicholas Burns: There is still intellectual property theft from American companies here.
Lesley Stahl: Is every American company afraid of that?
Nicholas Burns: Yes.
All kinds of U.S. companies began flocking to China in the early 1980s after the country opened to the West under then-leader Deng Xiaoping.
And now, U.S. banks operate here. Walmart has more than 300 stores across the country. Shoppers, here in Shanghai, can buy Levi’s, browse in an Apple store, and get a caramel frappuccino.
