U.S. Commerce Secretary Faces a Wide Range of Issues in China
Gina Raimondo, the secretary of commerce, who arrived in Beijing on Sunday, is the latest Biden administration emissary seeking to stabilize ties between the world’s two largest economies.
The fourth senior U.S. official to travel to China in less than three months, Ms. Raimondo is taking her trip at a critical juncture. Relations between the countries are strained, partly because the United States has clamped down on China’s access to technology that could aid its military. China’s economy also appears to be slowing, and Beijing has been trying to woo more foreign investment, while tightening its scrutiny of foreign businesses.
Ms. Raimondo’s agenda is varied, including economic diplomacy, getting to know China’s new economic team and defending the interests of American companies and their employees. Both U.S. and Chinese officials have hinted that while many of the large issues probably can’t be resolved in these meetings, there are perhaps a few areas where the two sides might move closer to agreement.
Here’s a look at the issues that are expected to dominate the trip.
U.S.-China tech war
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 and other restrictions that the Biden administration has put in place, many of which have angered Chinese officials and prompted retaliation.
This month, the Biden administration announced plans to bar private equity and venture capital firms from making investments in China in quantum computing and advanced semiconductors. Though those restrictions weren’t as sweeping as some had expected, Chinese officials are still smarting at the administration’s decision last October to place significant limitations on the kinds of advanced semiconductors and chip-making machinery that can be sent to China.
A new bipartisan law aimed at strengthening the U.S. semiconductor industry has also rankled Chinese officials, especially because it 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 recently began regulating exports of metals used to make chips, 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 talk about the U.S. rationale and make clear its efforts are aimed at protecting domestic security.
Ms. Raimondo said in a briefing with reporters ahead of the trip that one main goal of the visit will be to “explain and bring further transparency” to the national security strategy of protecting critical technologies.”
Still, she said, enforcement of these rules is “not up for debate, not up for compromise, not up even really for discussion. But it is important that we have transparency with the Chinese and that our national security policies are understood by our P.R.C. counterparts to avoid misunderstanding, to avoid unnecessary escalation, to avoid miscalculation,” she said, referring to the People’s Republic of China.
A deteriorating business environment for foreign firms
In addition to raising concerns about China’s treatment of Micron, Ms. Raimondo is expected to air complaints from other Western businesses who say they are increasingly worried about accidentally triggering 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 this month on Mintz for doing unapproved statistical work.
International executives now regularly express worries about carrying out routine business activities, 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.
Those anxieties, along with technology controls, tariffs and other barriers to trade, have most likely contributed to a trend of declining foreign investment in China.
“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.
Promoting commercial ties in other areas
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.
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 said that one key goal for the trip would be promoting commercial ties where they align with U.S. interests, naming tourism and “people-to-people exchanges.” As an example, she pointed to the recent U.S. move to restore group travel from China to the United States, saying that a return to 2019 levels of Chinese visitors would generate $30 billion for the American economy.
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, and the Chinese defense minister still refuses to speak with the U.S. defense secretary, Lloyd J. Austin III.
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, Ms. Raimondo said. She is expected to have the opportunity 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.
“There is benefit to communicating to reduce tension,” she said. “That does not mean compromise, that means communicate.”
Economic slowdown and transparency
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 believe in openness and transparency and reporting,” Mr. Sullivan said on Tuesday. “And 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.”
Ana Swanson is based in the Washington bureau and covers trade and international economics for The Times. She previously worked at The Washington Post, where she wrote about trade, the Federal Reserve and the economy. More about Ana Swanson
Alan Rappeport is an economic policy reporter, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters. He previously worked for The Financial Times and The Economist. More about Alan Rappeport
Keith Bradsher is the Beijing bureau chief for The Times. He previously served as bureau chief in Shanghai, Hong Kong and Detroit and as a Washington correspondent. He has lived and reported in mainland China through the pandemic. More about Keith Bradsher
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