THE DRAGON HAS NO TEETH:

Against that backdrop, the Beijing government is now focused on engaging with the West in a less frosty manner, even when it comes to its arch-rival in Washington. Several U.S. officials -- from Secretary of State Antony Blinken to Treasury Secretary Janet Yellen -- have visited China in recent months, and Commerce Secretary Gina Raimondo is expected to go later this summer. An EU-China summit is also in the pipeline, according to one diplomat speaking anonymously because the plans are yet to be finalized.

Beijing is also keen to reassure private businesses in China, but it doesn't seem to be working. 

"What we saw was actually a decrease in the overall confidence level" among 570 EU companies operating in China who took part in a recent survey, according to Jens Eskelund, president of the EU Chamber of Commerce in China. "And a lot of that has to do with an increased level of uncertainty where China is, in particular about the Chinese economy," said Eskelund, whose chamber represents 1,700 mostly European companies and entities in China.

Xi consistently demonstrated a preference for the state-owned sector. His most radical moves against the private sector have been targeted at tech giants, even though they're widely considered the best hope for China to compete with the West. On Xi's watch, the Chinese bureaucracy has cracked down on multinational e-commerce platform Alibaba's billionaire-founder Jack Ma, restricted the development of online gaming and private tutorial classes, and heavily regulated data even for foreign companies. 

Some Western companies are already looking elsewhere. According to Eskelund, the EU chamber chief, 11 percent of businesses surveyed last year said they were weighing up whether to leave China. This year, the exact same share of companies reported they had already taken the decision to go.

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