Seven Months In, Biden Uncertainty On China Policy Is Hurting American Business23/08/2021 5
The lack of a clear agenda on trade and investment policy toward China by the Biden administration has created uncertainty that is hurting American companies that aim to do business with the country, the president of an influential U.S.-China business group said on Wednesday.
“Joe Biden has been in office for about seven months,” U.S.-China Business Council President Craig Allen said. “Before he came into office, many of us, myself included, expected a calming of the waters and reduction of bilateral tension. Rather, what we’ve seen is very little change in policy, particularly trade policy, and indeed we’ve seen a heightening of tensions. and for businesses, increased uncertainty. Biden has changed Trump’s policies in so many areas. But why not U.S.-China relations and trade policy?”
If asked, Biden officials “will tell you that the policy is under review. If you ask them when will the review be complete, they will tell you that’s under review. So clearly, there are many discussions going on regarding China. Different agencies have different opinions.”
Allen, a longtime U.S. diplomat and trade official, spoke at the 3rd U.S.-China Business Forum organized online by Forbes China under the theme “Rebuilding Momentum.” Members of the Washington, D.C.-headquartered council include Johnson & Johnson, Microsoft, Pepsi, Qualcomm and Walt Disney. The stakes in U.S.-China business relations are big. Approximately a million Americans rely on exports to China for their livelihood; and, though flows of capital have dipped in recent years, China remains one of the largest recipients of U.S. overseas investment.
Even amid policy uncertainty, U.S. companies in China – the world’s second-largest economy – are making profit and reporting growth, according to a member survey earlier this month by the council. More than 40% are accelerating their resource commitment for the next year; only six percent are curtailing investment, though competition with Chinese companies is intensifying and new rules for data flows and personal information make the playing field increasingly uneven for foreign companies, the council said. Tariffs continue to pose challenges and pandemic-related travel restrictions have exacerbated political tensions and operational obstacles; at the same time, “trade tensions have resulted in reputational damage to U.S. firms, lost sales, shifts in suppliers, and heightened scrutiny from regulators in both the United States and China,” it noted.
Biden’s room to adjust U.S. policy is partly constrained by his party’s razor-thin control of Congress and American public opinion that is skeptical about China. “We are watching 240 draft laws or resolutions that are explicitly about China. There’s a very large number,” and includes the 2,400-page “Competitiveness and Innovation Act,” which focuses on technology, as well as the “Xinjiang Forced Labor Prevention Act,” the latter of which “almost certainly will become law,” Allen said. “In general, I would say that the White House is working relatively closely with the House and the Senate, and that the White House wants a bi-partisan, bi-cameral policy
toward China. That said, it’s unclear which of these 240 pieces of legislation might become law and of course how that law will be implemented. What is clear is that the Chinese government doesn’t like any of this legislation, but they don’t have too many tools to change the debate.”
The large number of bills also reflect different priorities between Biden and Donald Trump. “Certainly, the Biden administration places much greater emphasis on values such as democracy and human rights,” Allen said. In addition, “the Biden administration from the start has been dedicated to working with allies, friends and partners, and has been rigorous in pursuing our alliance relationships.” For its part, China’s negotiation tone hasn’t helped. “The messaging from Beijing has not been particularly warm,” said Allen, who suggested that “megaphone diplomacy” by China made talks difficult.
“When Deputy Secretary Sherman was in Tianjin about 10 days ago, the Chinese Vice Foreign Minister Xie Feng related three lists of demands for the U.S. side. Publicly doing that makes it much more difficult to engage in substantive negotiations and actually resolve problems.” China’s state-run news agency Xinhua, citing Xie, said the China-U.S. relationship is in “a stalemate, fundamentally because some Americans portray China as an ‘imagined enemy.’” Xie urged the U.S. to change “its highly misguided mindset and dangerous policy,” Xinhua said.
The upshot of the strained overall relationship between the two countries, Allen said, is that “Biden trade policy has not shifted as business would have preferred,” he said. “The bilateral trade negotiations aren’t in a particularly good place.”
Biden will likely need to spell out his trade and China policy approaches more clearly by Nov. 13 when he is scheduled to speak to APEC and to a gathering of the G20 in late October. “I would say Nov. 13 will be a deadline to present a cogent policy going forward.”
“I was very pleased that newly arrived Chinese Ambassador Qin Gang met with or spoke with Deputy Secretary of State Wendy Sherman on Thursday of last week,” Allen added. “We are confident that despite the fact that the bilateral relationship is in a very bad place, that the trade and investment negotiations are one area that is a legitimate topic of conversation considered by both governments at a high level where real progress can be made,” he said. “Indeed, we have a framework from the Trump administration – we have Phase One, Phase Two agreements. We have commitments that are ongoing until the end of the year. We have a plan to move forward to Phase Two. We encourage both governments to take advantage of the scaffolding, of the framework left by the Trump administration to move forward.”
The problem is urgent because the Phase One agreement ends in only four months, Allen said. “The level of uncertainly is very high until our government tell us what is their intentions. We are hopeful that the negotiations will resume in the very near future,” he said.
“I am confident that on the trade and investment agenda that we can make real progress,” he said. “Good negotiations – not megaphone diplomacy, but good negotiations – with give and take on the trade side can be a confidence-building measure to help to address the greater problems in the U.S.-China bilateral relationship.”
At least one missing piece of relations was filled in on Friday: Long-time diplomat Nicholas Burns was nominated to become U.S. ambassador to China.