Benzinga - by Natan Ponieman, Benzinga Editor.
A San Francisco summit is becoming a stage for cooperation talks with China, as both the public and private sectors in the U.S. look to thaw relations with the Asian economic giant.
The jewel of the Asia-Pacific Economic Cooperation summit will be a face-to-face encounter between U.S. President Joe Biden and Chinese President Xi Jinping, who have not met in person in over a year. The meeting is expected to help achieve a new balance between the world's two largest economies after years of confrontations that have threatened to reach belligerent terrain.
No less important is an upcoming audience between Xi and the leaders of some of the most powerful companies in the U.S. that could include Citigroup Inc (NYSE:C) CEO Jane Fraser, Exxon Mobil Corp (NYSE:XOM) CEO Darren Woods, Microsoft Corp (NASDAQ:MSFT) CEO Satya Nadella and Tesla Inc (NASDAQ:TSLA) CEO Elon Musk.
The executives are looking to establish a new floor for commercial action with China.
The State Of US-China Trade: Trade with the country has become increasingly complicated after both China and the U.S. launched a series of sanctions aimed at protecting their own domestic industries. These measures have led to a decrease in Chinese investment in the U.S. as well as increasing concern for U.S. companies that China's market of 1.4 billion is slowly becoming out of reach.
Chinese officials are looking to reassure business leaders that China remains as open as it has been in previous decades, per Bloomberg, responding to protests that Xi's latest policies make it "impossible" to do business with the country, as one hedge fund manager recently put it.
The outlet reported that an informal dinner with Xi will be held, with most high-profile executives asking to be invited.
In recent years, a significant number of S&P 500 companies have started to place unstable geopolitical tensions between the U.S. and China at the center of their foreign investment strategies, leading to a decrease in money allocated to countries less aligned with the U.S.'s political values.
Stocks To Watch: The most sensitive companies when it comes to China relations are those which depend on the Chinese market for their balance sheet success, as well as those with large manufacturing centers in China.
Tesla is in both of these categories. Car deliveries in China peaked in June and have been in a slump during the second half of this year. The country remains Tesla’s largest addressable market in the world. In parallel, as per data from the China Passenger Car Association, more than half of Tesla's vehicles sold globally come from the company's massive plant in Shanghai.
Apple Inc (NASDAQ:AAPL) is also being affected by China's recent policies. The company's shares were hit late last month as it became known that iPhone sales in China have been dropping. Almost 20% of the company's total sales come from China, where most of its products are also assembled.
For Ford Motor Co (NYSE:F), China represented about 5% of total sales during 2022, and the company has eight factories located in the country.
Starbucks Corp (NASDAQ:SBUX) has over 6,500 stores in China, about a third of those in the U.S. The two countries represent 61% of the company's total global business.
China accounted for 15.5% of total revenue for Nike Inc (NYSE:NKE) during 2022.
For semiconductor maker Qualcomm Inc (NASDAQ:QCOM), China represents more than 60% of its sales, which has recently led the company to defy export restrictions set by the Biden administration.
Competitor NVIDIA Corp (NASDAQ:NVDA) has also been jumping through hoops to accommodate Biden’s restrictions on semiconductor sales to China, which were tightened last month.
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