Business law

The US Commerce Secretary faces a wide range of issues in China


Gina Raimondo, the commerce secretary, who arrived in Beijing on Sunday, is the latest envoy of the Biden administration seeking to stabilize relations between the world’s two largest economies.

Ms. Raimundo is the fourth high-ranking US official to travel to China in less than three months, and her trip is at a critical juncture. Relations between the two countries are tense, in part because the United States has clamped down on China’s access to technology that could help its military. The Chinese economy also appears to be slowing, and Beijing is trying to attract more foreign investment, while tightening its monitoring of foreign companies.

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. American and Chinese officials have hinted that although many of the big issues cannot be resolved in these meetings, there may be some areas where the two sides may come closer to agreement.

Here’s a look at the issues that are expected to dominate the trip.

One of the main issues for both sides will be the increasing restrictions on trade in advanced technology between the two countries, especially those imposed by the United States. The department is supervised by Ms. Raimondo Export controls and other restrictions imposed by the Biden administration, many of which have angered Chinese officials and led to retaliation.

And this month, the Biden administration announced plans to do so Prohibition of private equity and venture capital firms from making investments in China in quantum computing and advanced semiconductors. Although those restrictions were not as comprehensive as some had expected, Chinese officials They are still smart Based on the management’s decision last October to put it Big limitations About the kinds of advanced semiconductor and chip making machines that can be sent to China.

A bipartisan new law aimed at boosting the semiconductor industry in the United States has also angered Chinese officials, especially because it bars companies from accepting federal funds. from making new high-tech investments In China.

China has had its own broader limits since 2016 on most overseas investment by Chinese firms and households. Recently, Chinese officials began regulating exports of metals used to make chips. Planned merger thwarted between Intel and the Israeli chip maker Ban some sales by US chipmaker Micron, which Micron estimated could cost the company Almost eight of its global revenue. The moves against Micron and Intel were viewed by some Chinese experts as retaliation for the Biden administration’s tougher treatment of China’s tech sector.

In an effort to prevent an economically devastating retaliation, Ms. Raimondo is expected to speak to American logic and make clear that its efforts are intended to protect homeland security.

One of the main goals of the visit will be to “explain and bring more transparency” to the National Security Strategy for Protecting Critical Technologies, Ms. Raimondo said at a press conference before the trip.

However, she said, the application of these rules is “not up for discussion, not up for compromise, not even really up for discussion.” “But it is important that we have transparency with the Chinese and that our counterparts in the People’s Republic of China understand our national security policies to avoid misunderstandings, avoid unnecessary escalation, and avoid miscalculations,” she added, referring to the People’s Republic of China.

In addition to raising concerns about China’s treatment of Micron, Ms. Raimondo is expected to publish complaints from other Western companies that say they are increasingly concerned about China’s expansive national security laws being erroneously triggered.

In March, the Chinese authorities Five Chinese nationals arrested Working in Beijing for the Mintz Group, a US consulting firm, and in April, the authorities Question the staff In the Shanghai office of Bain & Company, the US management consulting firm. Chinese government Imposing a fine of $1.5 million This month on Mintz for doing uncredited statistical work.

International executives now regularly express concerns about carrying out routine business activities, such as conducting due diligence on acquisition targets or transferring data between subsidiaries. And US multinationals have begun preparing contingency plans in case their employees are detained in China, and have brought back very few expatriates who left the country during the pandemic.

These concerns, along with technological controls, tariffs, and other barriers to trade, have likely contributed to the decline in foreign investment in China.

“People are afraid to go to China,” said Susan Shirk, a research professor at the UC San Diego Twenty-First Century China Center and author of Overreach: How China Derailed Its Peaceful Rise.

“This concern about physical security hinders interactions on both a commercial and academic level,” she added.

Despite the cold weather, Ms. Raimondo and other officials insist there is still plenty of potential for trade between the world’s two largest economies. China remains the third largest market for US exports, buying more than $150 billion worth of products from US farms and companies.

Ms. Raimondo noted that US export controls affect only 1 percent of bilateral trade between the two countries. She added that exports to China support more than 80,000 jobs in the United States, benefiting small and large companies alike. The United States also continues to import hundreds of billions of dollars’ worth of products from China each year.

One of the main goals of the trip, Ms. Raimondo said, is to enhance trade relations as they align with US interests, naming tourism and “people-to-people exchanges.” For example, she cited the recent US move to restore group travel from China to the US, saying that a return to 2019 levels of Chinese visitors would generate $30 billion for the US economy.

The most important, but still essential, component of the trip is enhanced communication between the United States and China. These channels have been severely atrophied in the aftermath of the Chinese surveillance balloon that flew over the US earlier this year, and the Chinese defense minister still refuses to speak with US Secretary of Defense Lloyd J. Austin.

Ms. Raimondo said she spoke with President Biden on Thursday, and that he asked her to carry a message to Chinese leaders that “we need to communicate to avoid conflict.”

Ms. Raimondo said this will be the US Secretary of Commerce’s first trip to China in seven years. It is expected that she will have the opportunity to meet many members of a New Economic Team He has been in office since the Communist Party held its once-in-five-year national congress last fall.

“There is a benefit of communication to reduce stress,” she said. “This does not mean compromise, it means communication.”

Looming over the visit were concerns about the recent economic slowdown in China, and how this could affect the global economy and bilateral relations in the future.

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

The agency said it needed to improve its polling. But the decision, along with the suspension of tens of thousands of other data streams in recent years, has led to suggestions that China was trying to hide negative economic data.

Jake Sullivan, the White House national security adviser, said Ms. Raimondo is expected to discuss Chinese economic data during her trip.

“We believe in openness, transparency and reporting,” Mr. Sullivan said Tuesday. “And we believe that for global confidence, predictability, and the rest of the world’s ability to make sound economic decisions, it’s important for China to maintain a level of transparency in publishing its data as well.”


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