Wed. Oct 5th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

March 9, 2022

US-China relation is not in the ICU, but it is pretty tense. Biden Administration has not announced their China Strategy so far and their trade policy with China has not evolved away from Trump’s policy yet. But trades between the US and China are moving forward, with US trade deficits keep rising.

The Ukraine war has limited the bandwidth of Biden’s foreign policy team. However, the severe economic sanctions against Russia led by the US are already creating excessive volatilities in the global economy, which has been battered by the COVID-19 pandemic for the past two years already. China is in the cross hair of US now for her close relationship with Russia. Ukraine war will end one way or the other in a few weeks. But the wound of the war will take a long time to recover, especially Europe will bear consequences, especially in terms energy security.

Most likely, US and China trades will be the major driving force for the post-war economy. The following news reports present some perspectives of US businesses in China. Some highlights are:

  1. Quote: “how the pandemic and the whims of Beijing’s policy changes play out.” China has concluded her annual two-sessions last week, so it is possible that Beijing’s policy is stabilized.
  2. Quote: “said they had also experienced similar pressure from the U.S. government.” The pressure from the US government could be attributed to what is Biden’s new China strategy. There are many tough bills against China in the congresses, if passed and enforced, US business in China will be severely challenged. It will not just because Chinese retaliation measures but also the unknown US imposed restrictions.
  3. A major challenge for any business is “uncertainty.”
  4. US-China relation in general is unsettled. It takes two to tangle!
  5. The Ukraine war and its legacy are uncertain.
  6. Post-Pandemic recovery is uncertain, and nations need to work together and coordinate the easing of cross-border travels and build a sustainable new global supply chain.

Barrion’s

U.S. Firms in China Aren’t Leaving. They’re Just Not Investing More, According to This Survey.

By Tanner Brown March 8, 2022 10:16 am ET

American firms aren’t leaving China, but they also aren’t planning significant increases in investments there, according to a new report.

Faced with the uncertainties surrounding Covid-19, Chinese regulations, and U.S.-China tensions, American firms in China have largely put their operations in a holding pattern, according to a survey of hundreds of U.S. firms by the American Chamber of Commerce in China.

The findings reveal how murky the business environment is for U.S. firms with a China presence, and how most seem to be waiting to see how the pandemic and the whims of Beijing’s policy changes play out.

Revenue from China operations leapt to 58% in 2021 from 35% the year before. Profitability was up as well, though only slightly. Furthermore, China remains of leading importance for most U.S. firms surveyed: Nearly two-thirds rank China as the top or a top-three priority for near-term global investment. Importantly, 83% said they aren’t considering relocating manufacturing or sourcing outside of China.

Yet there still remain considerable pessimism and uncertainty.

There were double-digit declines in optimism related to the regulatory environment, domestic market growth, and China’s economic recovery. And for good reason. Foreign firms have long been frustrated by the obstacles they must navigate to do business in China, alongside sudden policy changes, unkept promises of opening up, and retaliatory measures in U.S. relations.

“The prospect of winning in China—and winning big—continues to motivate business decision-making, despite an otherwise pessimistic outlook,” the report said.

That pessimism is seen also in the tepid investment environment, with most respondents saying they had no plans to increase their investments in China beyond 10%, and many with no plans to invest more at all. There is “a host of policy and regulatory issues that are contributing to lower investment,” Alan Beebe, the chamber’s president, said on a press call.

Covid-19, of course, continues to present manifold frustrations. The majority of respondents said the cost of products and services has been negatively impacted, as has suppliers’ ability to provide materials and component parts. Nearly 75% singled out the negative impact on international transportation costs.

And nearly all of the 27 firms that said they are planning to relocate cited pandemic repercussions as the driving factor, as China continues with its stringent “zero-Covid” policies. But the number one obstacle China’s Covid-19 approach has on firms is transportation and travel. China’s borders remain largely closed to foreigners and 21-day quarantines remain in place for the few who manage to enter. There is also only a trickle of flights currently into China, and the ticket prices are often extraordinarily high.

The report noted that this not only affects inbound American businesspeople and their families, but also hinders Chinese staff from what were once routine trips to the U.S. Stemming from this, there were significant increases in firms who said qualified candidates are unable or unwilling to move to China.

One finding stood out that hadn’t previously been reported. Companies were asked if they had received an increase in pressure from the government or media to make—or refrain from making—politically sensitive statements. Unsurprisingly, 66% said they had received such pressure from the Chinese government, and 38% from Chinese media—most of which are state-owned. But 32% said they had also experienced similar pressure from the U.S. government.

The report didn’t delve into what specifically the firms were pressured to say or not say, but it highlights the difficulties of operating in an authoritarian country, and one that is in conflict with the firms’ home government.

In perhaps an incremental but positive step forward, China has moved to extend preferential policies related to the income tax for foreigners, and inched forward in launching the U.S.-China Fast Track Travel Channel Program, which aims to facilitate travel into China for the American business community and their families.

GM gears up to launch new premium import business in China

Tue, March 8, 2022, 4:56 AM PST

BEIJING (Reuters) – General Motors Co plans to create a new, independently owned premium brand in China that will market what the automaker’s China chief Julian Blissett recently described as “halo cars” brought in from the United States.

GM plans to build this new “premium import business” from the ground up and operate it with “a high level of autonomy,” GM said in a statement on Tuesday.

“Halo cars,” as described by Blissett, refer to premium, often high-performance cars that have an edgy design.

“We are inviting talent from across the industry to join us and jointly create our brand-new business in China,” it said.

The U.S. automaker issued the statement after multiple Chinese media outlets reported this week about the new wholly owned brand.

According to a Shanghai-based GM spokesperson, Blissett told Chinese media outlets on Friday the new premium brand will specialize in selling upscale GM vehicles currently unavailable in China through its existing brands. Those brands include Wuling, Baojun, Chevrolet, Buick and Cadillac, all of which are owned and operated with Chinese joint-venture partners.

Blissett told Chinese media outlets the new business will be fully owned by GM, the spokesperson said.

Additional details such as which vehicle models the new brand plans to sell or how such models are going to be marketed and distributed will be announced at a later date, she said.

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