Commerce Secretary Gina Raimondo cautioned Chinese authorities on Wednesday that if they don’t take quick action to address complaints about the worsening conditions caused by raids on enterprises, arbitrary penalties, and unpredictable official behaviour, American businesses may quit investing in their nation.
The Chinese government, led by President Xi Jinping, is under pressure as it works to pique investor interest and reverse an economic downturn as a result of Raimondo’s remarks. Business associations claim that there is a historic low in foreign company confidence. According to official data, foreign investment decreased in the most recent quarter.
as part of U.S. efforts to improve ties that have deteriorated to their worst state in decades as a result of disagreements over Taiwan, technology, security, and other concerns. She praised the “very productive” nature of her discussions with Premier Li Qiang, China’s No. 2 leader, and other officials, but said that she “didn’t pull any punches” while expressing her business grievances.
Before her trip, Raimondo claimed CEOs had warned her that pressure from Beijing’s expansion of an anti-spying law this year, raids on select businesses, tighter restrictions on data, and lack of knowledge about regulatory changes would rise.
My point was that these concerns need to be addressed, and U.S. industry wants to see some action. If not, they will consider it to be just too dangerous and, as I said, uninvestable,” Raimondo told reporters at a Boeing Co. joint venture in Shanghai’s eastern Pudong neighbourhood.
According to official figures, foreign direct investment in China decreased 89% from a year ago in the three months that ended in June. Business groups have warned international companies are delaying new spending until their status is clarified. The majority of investment is thought to be brought into the country by Chinese corporations posing as foreign firms in order to receive tax benefits and other incentives.
It’s getting harder to be patient, Raimondo added. Conditions for businesses that have long complained about technology theft and official favouritism of Chinese rivals, according to the speaker, are “becoming in some ways even tougher.”
From 2.2% in January-March to 0.8% in the three months that ended in June, the economy grew at a slower rate. This translates to an annual rate of 3.2%, one of China’s lowest in recent memory.
Despite this, Li, the premier, expressed optimism that the economy can reach the yearly growth target of “about 5%” set by the ruling party.
Raimondo stated that she supported initiatives like the ruling party’s presentation of a 24-point plan to better the business environment. She claimed that on Wednesday, Chen Jining, the party secretary for Shanghai, informed her that the city was thinking about setting up a hotline to handle business concerns.
The reality on the ground must match the rhetoric, according to Raimondo.
The most significant outcomes came from Raimondo’s trip, which followed a series of visits to Beijing by American officials over the previous three months, including Secretary of State Antony Blinken in June and Treasury Secretary Janet Yellen last month.
The two countries declared on Monday that they will set up two panels to tackle additional trade concerns and exchange information regarding Beijing-unfavorable U.S. export restrictions on technology. A “travel and tourism summit” and a meeting of officials to examine trade secret protection were also agreed upon.
In response to Nancy Pelosi, the then-House Speaker, visiting Taiwan in August 2020, Beijing cut off communication with Washington on military, environmental, and other matters. The ruling party rejects interactions with foreign officials and asserts ownership of the self-governing island democracy.
A tariff war started by then-President Donald Trump over grievances such that Beijing steals or puts pressure on businesses to hand over technology already damaged relations.
Tuesday, Li made a request of Raimondo for “concrete actions” by Washington to strengthen ties, a reference to Chinese pressure for adjustments to U.S. policy on Taiwan, technology, and other matters.
On the basis of security, Washington has prohibited China from obtaining processor chips and other technology. This poses a danger to the ruling party’s plans to develop the artificial intelligence industry and other sectors. In March, Xi charged that Washington was attempting to obstruct China’s progress.
Tuesday marked the first gathering of the group. There would be other meetings, according to Raimondo. She claimed that the gatherings’ sole purpose is to disseminate information; they are not designed to affect American export restrictions.
In the first meeting, we were able to make it clear that we weren’t going for China, Raimondo added. “We are focusing on behaviour and actions that jeopardise American national security, and we sought to start outlining our procedures.”
According to Raimondo, export controls “will continue to be the area of the most contention, but communication can only help.”
The introduction of an anti-spying statute, which some claim leaves them unsure about what consumer and other information they can obtain, has made things worse for overseas businesses. This month, Mintz Group, a research company, was fined $1.5 million for allegedly gathering data inappropriately. On the basis of security, China ordered manufacturers of some data equipment to stop using goods from Micron Inc., the largest manufacturer of memory chips in the United States.
The secretary cited Visa and Mastercard as an illustration of the necessity to treat each other’s businesses equally. While Chinese payment systems Alipay and UnionPay are available without restriction in the United States, credit card issuers have been waiting years for approval of their applications to operate in China.
Although we came to no conclusions, I believed it was crucial to bring the matter up, according to Raimondo. And I did feel understood.
Raimondo said that she told Chinese officials that her own emails had been taken by hackers during a phone call with reporters. She didn’t mention the source, but The Washington Post reported in July that she and Blinken were the targets of Chinese hackers who were supported by the Chinese government.