Henry Paulson warns global firms against withdrawing from China market

By Zhang Heling

Former U.S. Treasury Secretary Henry Paulson had a blunt message for American business leaders at a luncheon in Beijing: Withdrawing from the Chinese market is a strategic misstep.

Former U.S. Treasury Secretary Henry Paulson speaks at a luncheon in Beijing on June 10. [Photo courtesy of the Center for China and Globalization]

"If you are a leader globally and want to continue to be a leader globally, you walk away from China at your own peril," he said, urging companies to stay engaged even as geopolitical tensions persist.

Paulson, founder and chairman of the Paulson Institute, has decades of experience engaging with Chinese policymakers. He said well-managed companies must build resilient supply chains and never depend on a single country for critical components, but stressed that global leadership requires a presence in the world's second-largest economy.

"You can't understand this market unless you come here," he said. 

Paulson pointed to the newly established boards of trade and investment as practical mechanisms to provide clearer guidance for cross-border investment, and specifically noted that facilitating Chinese investment in U.S. private equity funds could be a tangible area for progress if both sides work through regulatory hurdles.

On managing competition, Paulson called for clear "guardrails" to prevent intense rivalry from devolving into military or economic conflict through miscommunication or miscalculation. He said robust dialogues on economic and security issues are essential and that both sides must recognize each other as "permanent major powers."

While acknowledging what he called a "trust deficit" larger than the trade deficit, he said practical cooperation remains possible, particularly in areas where mutual interests align.

Turning to global challenges, Paulson said climate change, biodiversity loss and the rise of agentic AI are no longer distant risks but realities that no country can address alone.

His institute continues to work with Chinese partners on green finance, wetland conservation and national park projects, and he highlighted a forthcoming study on financing nature conservation.

"Hopelessness is the enemy," he said, urging governments and non-governmental organizations to find common ground on governance frameworks for emerging technologies.

While acknowledging the difficulties, Paulson remained cautiously optimistic about the potential for practical cooperation, calling for expanded investment flows as a pathway to rebuild mutual confidence. The profound challenges facing the world — from pandemics to nuclear proliferation to financial instability — demand that the two largest economies work together, he said.

Stability is achievable, he added, but sustained effort, honest communication and a focus on shared interests are essential to turn fragile coexistence into a more stable and constructive relationship.

The luncheon, themed "Evolving China-U.S. Dynamics and Global Strategic Outlook," was convened by the Center for China and Globalization on June 10.