U.S. Commerce Secretary Faces a Wide Range of Issues in China

U.S. Commerce Secretary Faces a Wide Range of Issues in China

Gina Raimondo, the secretary of commerce, began meeting Chinese officials on Monday as the latest Biden administration emissary seeking to stabilize ties between the world’s two largest economies. In working toward that goal, she has a lot of ground to cover.

During meetings with government officials and business leaders in Beijing and Shanghai this week, Ms. Raimondo is expected to tackle a range of challenging issues in the U.S.-China relationship, from explaining the controls the United States is rolling out on China’s access to advanced chips and other technology, to promoting ties in less sensitive areas.

Ms. Raimondo is likely to announce the creation of groups with China to discuss technology and business issues, and to cap her visit with a trip to Shanghai Disneyland to highlight the potential for more tourism between the countries, according to people familiar with the plans.

In a meeting with China’s minister of commerce in Beijing on Monday morning, Ms. Raimondo said that it was “profoundly important” for the two countries to manage their differences.

“It’s a challenging relationship, we will of course disagree on certain issues, but I believe we can make progress if we are direct, open and practical,” Ms. Raimondo said.

The meetings are coming at a critical juncture, where relations between the countries are strained and China’s economy appears to be slowing. Here’s a look at the issues that are expected to dominate the trip.

One major topic for both sides will be the mounting restrictions on trade in advanced technology between the countries, particularly those imposed by the United States. Ms. Raimondo’s department oversees the export controls that the Biden administration put in place on China’s access to advanced chips last October, which have angered Chinese officials and prompted retaliation.

Chinese officials are also upset about the Biden administration’s proposal earlier this month to bar private equity and venture capital firms from making investments in China in quantum computing and advanced semiconductors, as well as a new bipartisan law aimed at strengthening the U.S. semiconductor industry, which bars companies that accept federal money from making new, high-tech investments in China.

China has had its own, much broader limits since 2016 on most overseas investments by Chinese companies and households. Chinese officials also recently scuttled a planned merger between Intel and an Israeli chip-maker, and banned some sales by the U.S. chip-maker Micron, which Micron has estimated could cost the company roughly an eighth of its global revenue. The moves against Micron and Intel were seen by some China experts as retaliation for the Biden administration’s tougher treatment of China’s tech sector.

In an effort to prevent an economically damaging tit-for-tat, Ms. Raimondo is expected to argue that the U.S. trade restrictions are aimed at protecting domestic security, not holding China’s economy back.

The two sides are also expected to announce the creation of a new working group during the visit to exchange more information about the controls. Some Republicans have pushed back on the idea of such a group, arguing in a letter to Ms. Raimondo that it would give China a way to influence the measures.

In a briefing with reporters ahead of the trip, Ms. Raimondo said that enforcement of these rules is “not up for debate.” But communication with the Chinese government about the policies can help avoid misunderstanding and unnecessary escalation, she said.

Ms. Raimondo is also expected to air complaints from Western companies about the increasing difficulty of doing business in China. That likely includes raising concerns about China’s treatment of Micron, and passing on complaints from other Western executives who say they are increasingly worried about China’s expansive national security laws.

In March, the Chinese authorities detained five Chinese nationals working in Beijing for the Mintz Group, an American consulting company, and in April, the authorities questioned employees in the Shanghai office of Bain & Company, the U.S. management consulting firm. The Chinese government imposed a $1.5 million fine last month on Mintz for doing unapproved statistical work.

International executives now regularly express worries about carrying out routine business activities in China, like performing due diligence on acquisition targets or transferring data between subsidiaries. American multinationals have begun preparing contingency plans in case their employees are detained in China, and have sent back very few of the expatriates who had evacuated the country during the pandemic.

“People are scared to go to China,” said Susan Shirk, a research professor at the 21st Century China Center at the University of California, San Diego, and the author of “Overreach: How China Derailed Its Peaceful Rise.”

“This worry about physical security is really putting a damper on interactions at the commercial as well as the academic level,” she added.

Despite a chillier atmosphere, Ms. Raimondo and other officials insist that there is still plenty of potential for trade between the world’s two largest economies. China remains America’s third-largest export market, buying more than $150 billion of products from U.S. farms and businesses.

Speaking before the trip, Ms. Raimondo noted that U.S. export controls affect only 1 percent of bilateral trade between the countries. Exports to China support more than 80,000 jobs in the United States, and benefit small as well as large firms, she said. The United States also continues to import hundreds of billions of dollars of products from China each year.

Ms. Raimondo is likely to reiterate that message as she meets business leaders in Beijing and Shanghai. Her visit will include meetings with American purveyors of personal care products who are exporting to China, and a trip to Shanghai Disneyland, where she is likely to tout a recent U.S. move to restore group travel from China to the United States.

“Like you, I’m a former governor, I’m a practical leader,” she told the Chinese commerce minister in her meeting Monday. “I’m here in the spirit of being practical and finding concrete ways to work together with you.”

A more basic, but still fundamental, component of the trip is promoting communication between the United States and China. Those channels badly atrophied following the fallout over a Chinese surveillance balloon that flew across the United States early this year.

Speaking before the trip, Ms. Raimondo said she had spoken to President Biden on Thursday, and that he had asked her to carry a message to Chinese leaders that “we need to communicate to avoid conflict.”

This will be the first trip to China by a U.S. commerce secretary in seven years.

She is expected to meet several members of a new economic team that has taken office since the Communist Party held its once-in-five-years national congress last autumn.

Looming over the visit are concerns about China’s recent economic slowdown, and how that could influence the global economy and bilateral relations going forward.

Economists and observers have expressed concern over a decision by the Chinese Bureau of National Statistics this month to stop publishing monthly unemployment information “for youth and other age groups,” which recently reached a record high.

The agency said that it needed to optimize its surveys. But the decision, together with the suspension of tens of thousands of other data series in recent years, led to suggestions that China was trying to hide negative economic data.

Jake Sullivan, the White House’s national security adviser, said that Ms. Raimondo was expected to discuss China’s economic data during her trip.

“We think, for global confidence, predictability and the capacity of the rest of the world to make sound economic decisions, it’s important for China to maintain a level of transparency in the publication of its data as well,” he said.

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