David Shepardson

Updated Wed, August 30, 2023 at 6:42 AM PDT·5 min read

SHANGHAI (Reuters) -U.S. Commerce Secretary Gina Raimondo talked up American firms’ desire to do business in China and her hopes for further engagement with Chinese officials on market access on Wednesday, after earlier comments over China being “uninvestible.”

At a press conference in Shanghai, Raimondo said she had not expected any breakthroughs on issues affecting U.S. firms such as Intel, Micron, Boeing, Visa and Mastercard in her first meetings with Chinese officials, but did hope to “see some results” in the next few months as a result of her four-day visit to Beijing and Shanghai.

Raimondo said there was strong appetite among U.S. businesses to make the relationship work and that, while some actions of the Chinese government have been positive, the situation on the ground needed to match the rhetoric.

“There is appetite among U.S. business to continue to do business (in China). The market is enormous,” she said. “U.S. businesses want to do business here but they need to have a predictable regulatory environment.”

Raimondo insists the U.S. does not want to decouple from China. “I am leaving with some optimism,” Raimondo said of agreements to continue dialogue on a lot of tough issues. “We can’t drift to a place of greater of conflict. It’s not good for the U.S., it’s not good for China, it’s not good for the world.”

On Tuesday she had told reporters on a high-speed train to Shanghai from Beijing that American companies had complained to her that China has become “uninvestible,” pointing to fines, raids and other actions that have made it risky to do business in the world’s second-largest economy.

On Wednesday she said: “For U.S. business in many cases patience is running thin and it’s time for action.”

Raimondo said she had raised with Chinese officials that her emails had been hacked and said that was an “action that erodes trust.” Reuters reported in July that Raimondo was among a group of U.S. officials whose emails were hacked earlier this year by a group Microsoft says is based in China.

Her comment on the difficulties U.S. businesses face has shone a harsh light on trade and investment flows between the geopolitical rivals.

“The essence of China-U.S. economic and trade relations is mutual benefit,” Wang Wenbin, a Chinese Foreign Ministry spokesperson, said on Wednesday, citing Premier Li Qiang’s remarks during his meeting with Raimondo on Tuesday.

“Politicizing and securitising economic and trade issues not only seriously affects the relationship and mutual trust between the two countries, it also harms the interests of their businesses and peoples,” he added.

Companies have been at the center of a power struggle between the two countries for several years. China has criticised U.S. efforts to block China’s access to advanced semiconductors through export controls.

Raimondo said export control dialogue was to reduce misunderstandings.

“We were able clarify at the first meeting that we are not targeting China,” she said. “We’re targeting actions and behaviour that undermine U.S. national security.” She reiterated on Wednesday that the United States is not willing to negotiate or change export controls.

INVESTMENT FLOWS

Global investors, who have been spooked by unpredictable crackdowns in China on sectors from e-commerce to education in recent years, have also been streaming out of Chinese assets lately.

Foreign net selling of 82.9 billion yuan ($11.4 billion) in Chinese stocks this month is a record outflow. Corporate investment is also going missing, with foreign direct investment (FDI) at its lowest since records began 25 years ago.

Michael Hart, president of the American Chamber of Commerce in China, said businesses had been “very clear” in making their concerns known to the Chinese government.

“Certain actions, including raids on companies and restricting data flows, are not conducive to attracting additional FDI,” Hart said.

That sentiment was echoed by Jens Eskelund, president of the European Union Chamber of Commerce in China, who said “‘uninvestible’ is not a term we would use to describe China,” instead describing it as “under-invested”.

‘WHOLE NEW LEVEL OF CHALLENGE’

Raimondo said U.S. firms were facing new challenges, among them “exorbitant fines without any explanation, revisions to the counterespionage law, which are unclear and sending shockwaves through the U.S. community; raids on businesses – a whole new level of challenge and we need that to be addressed.”

Raimondo, in opening remarks at a meeting on Wednesday morning with Shanghai Communist Party Secretary Chen Jining, struck a positive tone, saying she wanted to discuss “concrete ways that we can work together to accomplish business goals and to bring about a more predictable business environment, a predictable regulatory environment and a level playing field for American businesses.”

Chen said a stable relationship between China and the United States was crucial for the world, adding that Shanghai had the highest concentration of U.S. businesses in China.

Raimondo, who has said China was blocking tens of billions of dollars in deliveries of Boeing airplanes to Chinese airlines, on Tuesday said she raised the airlines’ refusal to accept delivery of Boeing 737 MAX airplanes but won no commitments.

Raimondo ends ‘successful and productive’ China visit; sustaining stable ties critical to pave way for possible leaders’ meeting in Nov

By GT staff reportersPublished: Aug 30, 2023 10:24 PM

US Commerce Secretary Gina Raimondo wrapped up her “successful and productive” four-day high-stakes visit to China on Wednesday, with the visit yielding material results, including the establishment of new communication channels to seek solutions to specific business issues and support for enterprises of the two countries in carrying out pragmatic cooperation.

Chinese observers welcomed the positive progress made in the China-US economic and trade relationship during Raimondo’s visit, but urged the US side to match its words with deeds. They said both sides are anticipated to maintain the largely stable China-US relationship over the next period to pave the way for a possible meeting of the leaders of the two countries at the APEC leaders’ meeting in November in the US.

They said the progress in the China-US relationship is also due to growth in China’s strength, and that China is no longer passive and will be increasingly capable of pushing China-US relations back to the normal track. Instead, the frequent visits of senior US officials to China reflect that Washington knows very well that it cannot deal a fatal blow to China with restrictions or by “decoupling,” and rather the hegemonic measures will backfire on the US itself.

‘Successful and productive’

“We have had a very successful and productive couple of days here,” Raimondo said at a conference for women executives in Shanghai on Wednesday morning.

The US and China have a massive and consequential economic relationship, which is good for the world, good for China and good for America, Raimondo said, noting that Washington wants US companies to invest and grow in the Chinese market.

During the four-day visit, Raimondo repeatedly mentioned that Washington seeks “healthy competition” with China and has no intention of containing China’s development or “decoupling” from China.

Raimondo’s softened tone reflects that the US has realized that China is not as passive as it previously was and that the US cannot completely decouple from China, Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Wednesday.

Decoupling impossible

It is impossible for the Biden administration to push toward real economic decoupling with China, which is not only a large manufacturing base but also a huge market for the US business communities, Huo Jianguo, a vice chairman of the China Society for World Trade Organization Studies in Beijing, told the Global Times on Wednesday.

Raimondo visited Shanghai Disneyland and a Boeing facility in Shanghai  on Wednesday, touting two prominent American exports, Reuters reported. “It’s an important form of soft power for the US,” Raimondo said. “It’s an iconic US brand, it’s gorgeous.”

“There would be no winners in a conflict or confrontation between China and the US, it would instead spell disaster for the world. The only right choice for the two countries is to combat global challenges together and provide more peace and development dividends to the world,” said Chinese Ambassador to the US Xie Feng in a speech delivered to the 5th US-China Business Forum on Tuesday.

 “It is hoped that the US side could earnestly implement its expression of ‘not seeking decoupling from China,’ and create a sound environment for the healthy development of bilateral economic and trade relationship,” Chinese Foreign Ministry spokesperson Wang Wenbin said at a regular press briefing on Wednesday.

Challenges persist

However, the US’ strategy toward China of containment and decoupling is fundamentally ingrained, and is unlikely to change with just one or several visits, Yu Xiang, a senior fellow at the Center for International Security and Strategy, Tsinghua University, told the Global Times on Wednesday.

“We will protect what we must, and promote what we can. That means ‘national security’ is non-negotiable, but despite that there are plenty of businesses we could do,” Raimondo told reporters during a brief online conference on Wednesday afternoon.

Regardless of the US’ own list of numerous sanctions, export controls and other coercive measures targeting China, Raimondo again hyped China’s so-called non-market practices, intellectual property issues and subsidies.

The Chinese side expressed serious concerns over US practices, including Section 301 tariffs on Chinese exports, semiconductor policies, two-way investment restrictions, discriminatory subsidies and sanctions targeting Chinese companies.

The China Council for the Promotion of International Trade said on Wednesday that the Biden administration’s newly-announced investment restrictions in key technologies like chips and artificial intelligence (AI) in China is a typical act of using government power to interfere in market operations, undermine competition and suppress the industrial development of other countries, which violates WTO principles of non-discrimination, fairness and free trade.

“The US restrictions and review mechanism on outbound investment purposely distort normal cross-border fundraising and operations of Chinese firms with the excuse of so-called ‘national security,’ and indiscriminately ban and censor international capital flow into China,” the council said at a press briefing held in Beijing, stressing that the US’ actions will also harm industrial chains that are highly reliant on global division and cooperation.