China’s Xi Draws Standing Ovation From U.S. Business Leaders—and Some Doubts

Instead, at a dinner with U.S. corporate chiefs and other guests, Xi sought to enlist corporate America’s help in easing bilateral tensions, emphasizing the room for both nations to work together—a theme of his meeting with President Biden earlier Wednesday. Throughout his speech, Xi described himself as a leader of the people and stressed the importance of buttressing bilateral ties with people-to-people exchanges, but didn’t specifically highlight trade or investment.

“China is pursuing high-quality development, and the United States is revitalizing its economy," Xi said. “There is plenty of room for our cooperation."

In attendance were CEOs including Apple’s Tim Cook and BlackRock’s Larry Fink, along with leaders and senior executives from Qualcomm, Boeing, Blackstone, KKR, Pfizer, FedEx and other large U.S. firms, which all invest in China and collectively have trillions of dollars in market value. Tesla CEO Elon Musk and Salesforce CEO Marc Benioff greeted Xi during the predinner reception but didn’t stay for the dinner.

One special guest symbolized historic cooperation between the two countries: a former Flying Tiger fighter pilot who helped China fight Japan during World War II.

The audience, which gathered at Hyatt Regency in downtown San Francisco, gave Xi a standing ovation as the Chinese leader went on stage, introduced by insurer Chubb CEO Evan Greenberg. They applauded his speech several times, including when he indicated the possibility of China sending more pandas to the U.S. “We are ready to continue our cooperation with the United States on panda conservation," Xi said.

But there were some notable absences compared with a similar dinner in Seattle in 2015 when Xi brought along high-profile tech CEOs including Alibaba founder Jack Ma. This time, even though the dinner was in the tech hub of San Francisco, there were barely any Chinese entrepreneurs, and fewer U.S. tech leaders, such as Meta Platforms CEO Mark Zuckerberg, despite the dinner’s proximity to Silicon Valley.

The event took place on a night when many business leaders were already committed to a separate dinner Biden hosted for leaders from countries along the Pacific rim who were in town for the Asia-Pacific Economic Cooperation meeting.

Harder Times for Businesses Tied to China

But for American CEOs, the optics of being seen wining and dining with the Chinese leader have changed since 2015 amid increased scrutiny from lawmakers in Washington.

Mike Gallagher, chairman of a House select committee on China, is demanding that the two main sponsors of the dinner in Xi’s honor—the National Committee on U.S.-China Relations and the U.S.-China Business Council—disclose the names of those who bought tickets, either the $2,000 per-person general admission ticket or the $40,000 fee to sit at the table with the Chinese leader. He called the spending unconscionable given China’s “genocide against millions of innocent men, women, and children in Xinjiang." China denies that allegation.

The risks for businesses operating in China have also increased substantially. Western management consultants, auditors and other firms have been hit with raids, investigations and detentions. Meanwhile, new espionage and data-security laws threaten to criminalize routine business activities.

That makes for a jarring contrast with Xi’s “win-win cooperation" message.

“He offered no hints of concessions to business or even interest in more investment in the Chinese economy," said a senior American business executive who attended the dinner. “The speech was propaganda at its finest."

Added another: “How could he not say anything about trade and investment given the audience?"

Xi came to San Francisco this week with the dual mission of stabilizing relations with the U.S. and restoring investor confidence in China’s economy. With a debt crisis and a protracted downturn brewing, Xi and his lieutenants want to stem the exodus of foreign capital that for years had helped drive China’s growth. In the way of that effort is the leader’s own national-security agenda that puts fending off perceived foreign threats ahead of development.

“He made some headway on the first with Biden," said Danny Russel, a former senior official for Asia in the Obama administration, who is now a vice president at the Asia Society Policy Institute. “The second will be more challenging."

Foreign firms are more likely to take profits out of China than reinvest these days, yanking more than $160 billion in total earnings from China during six successive quarters through the end of September, according to a Wall Street Journal analysis of Chinese data.

Wall Street Executives at Top Table With Xi

Some 44 guests sat at the table with Xi at Wednesday’s dinner, featuring a three-course meal including steak, vegetable curry and fruit tart. Among them were a who’s who on Wall Street, including Fink, Bridgewater Associates founder Ray Dalio, Blackstone CEO Stephen Schwarzman and KKR co-CEO Joseph Bae. More than 300 people in total attended the dinner.

Xi started his speech with a walk down memory lane, making note of the Flying Tigers, the start of formal diplomatic ties between China and the U.S., and his first visit to the U.S. nearly four decades ago. “I stayed at the Dvorchaks’ in Iowa," the Chinese leader said, referring to the American family he stayed with. “I still remember their address."

That Xi didn’t mention trade and investment with the U.S. contrasted with the remarks given by U.S. Commerce Secretary Gina Raimondo before. In a welcoming tone, Raimondo said during the Wednesday dinner honoring Xi that “we want robust trade with China" even as both nations put national security as their priority.

“We will protect as we must and promote as we can," Raimondo said.

Xi attended the dinner with the U.S. business community after a summit with Biden earlier Wednesday. The summit was the leaders’ first meeting in a year, and they reached agreements to resume military contacts, restart cooperation on choking off key ingredients for making fentanyl and open a new dialogue on the risks posed by artificial intelligence.

Just a year ago, when the two leaders held talks on the Indonesian island of Bali, Xi brimmed with confidence after political success at home that gave him a norm-breaking third term, according to people briefed on that meeting.

This time, Xi went into the summit with domestic challenges piling up while Biden was bolstered by a humming U.S. economy.

Noting the change of fortune, a senior administration official told reporters on the eve of the leaders’ summit that Biden was coming into the meeting “with the wind at his back."

Asked about Xi dining with American CEOs, the official said while most U.S. investment in China isn’t controversial, Biden “would prefer that some of that capital come to the United States."

The gathering gloom over China’s economy this year helped bring Xi to the table with Biden with a renewed interest in engagement. But fundamentally, countering the U.S. remains at the core of Xi’s foreign policy. And Xi still believes that the Chinese system will eventually prevail over the West’s—“the East is rising, the West is declining," as he puts it—even though the process might not be a straight line, said people close to Beijing’s decision-making.

Write to Lingling Wei at Lingling.Wei@wsj.com and Charles Hutzler at charles.hutzler@wsj.com