China's Mixed Signals

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Byline: Melinda Liu

It would be understandable if foreign business leaders are confused by the signals Beijing is sending these days. On the one hand, Premier Wen Jiabao cordially greeted international executives last week, telling them, "It's important to reinforce your confidence in China." On the other, Wen's comments came the same day Google shut its China search engine, saying it would no longer bow to government pressure to censor results. That controversy has contributed to the growing uneasiness of business leaders operating in China. A new survey shows a startling uptick in the percentage of U.S. IT executives who feel "increasingly unwelcome to compete in the Chinese market," from 26 percent in December to 38 percent in early 2010.

If it seems like China's sending mixed messages, that's because it is. While Beijing may appear monolithic to outsiders, in reality two camps are locked in a behind-the-scenes tussle over how best to deal with the world. On one side are the hardliners, who occupy prominent posts in the military and at Communist Party schools. Many of them "feel the U.S. is conniving to deceive China and keep it poor," says one Chinese foreign-affairs expert who requested anonymity. On the other side stand internationally oriented bureaucrats, including many in the Foreign Ministry and banking sector, who want to maintain peaceful ties with the West. …