China shuts down: The Chinese understandably want something better. "They want sophisticated international companies and they want to give them a leg up," says Brookings Institution senior fellow Kenneth Lieberthal.
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China has emerged from the global financial crisis largely unscathed. As a result, political analysts say, Chinese look at the rest of the world and feel a lot less awe and admiration than they once did.
There is also a sense that the previous leadership of President Jiang Zemin and Premier Zhu Rongji gave away too much—such as slashing tariffs on agricultural products and ending local-content requirements for foreign automakers—in their desire to enter the WTO. Now, China feels it should assert its own economic interests. If that involves throwing its weight around, so be it.
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And "states like California have wide latitude in their procurement policies, so they can give American companies an advantage," explains Nicholas Lardy, senior fellow at the Peterson Institute for International Economics.
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foreign investors, who used to be treated like honored guests and wooed with tax breaks and free land. After President Hu Jintao and Premier Wen Jiabao took over in 2002, things started to cool. That has left multinationals far less bullish on China. While foreigners have made substantial profits on the mainland, last year confidence about future earnings took a tumble, according to separate surveys from the U.S. and European chambers of commerce. Both groups report a majority of members make money in China, but the ranks of the profitable are shrinking. Just a third of European companies now say they're optimistic about future profits, down from half the previous year. In a separate survey by the American Chamber in Shanghai, 39% of companies say revenues fell in 2009, the largest number since 1999.
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