US Commerce Secretary’s China Trip Has a Chance of Success That Eluded Others

Of all the Biden administration officials to travel to China in recent months, Commerce Secretary Gina Raimondo may prove the most consequential to improving ties between the world’s biggest economies.

(Bloomberg) — Of all the Biden administration officials to travel to China in recent months, Commerce Secretary Gina Raimondo may prove the most consequential to improving ties between the world’s biggest economies.

Raimondo is set to arrive in Beijing on Sunday for talks on US-China business relations after the White House imposed curbs on the sale of advanced technology like chips and moved to restrict investments into strategic sectors including artificial intelligence and quantum computing. Officials in Beijing have repeatedly blasted the moves, with President Xi Jinping accusing the US earlier this year of seeking to contain China’s rise.

In the past three months, Secretary of State Antony Blinken, Treasury Secretary Janet Yellen and climate envoy John Kerry have each made a trip to China — but came back mostly empty-handed. Raimondo may have a better chance because the Commerce Department’s mandate is to promote US trade abroad as well as to combat practices the US considers unfair or dangerous to national security. 

In China, Raimondo is expected to announce a US-China working group on export controls as well as one on commercial issues, people familiar with the plans said. For all the strife in relations, China remains among the US’s biggest trade partners.

Raimondo’s visit may also help Boeing Co. resume shipping its 737 Max jets to China for the first time since 2019. The jetliner is the planemaker’s main source of cash as it rebuilds finances devastated by Covid and a global grounding of its Max plane. Rival Airbus SE has built a commanding lead in China, and around the globe, while Boeing’s workhorse jet has been shut out of its largest overseas market.

Boeing officials say they have picked up encouraging signals from their Chinese customers in recent months about restarting deliveries and sales, especially with domestic travel rebounding after officials eased draconian Covid restrictions. But with the government in Beijing guiding aircraft purchases, there’s always the risk that political rhetoric or military brinkmanship will dampen China’s interest in buying from the biggest US exporter.

Raimondo’s visit comes less than two weeks after the US signed a landmark deal with Japan and South Korea that included a promise to cooperate more on defense and a pledge to fight “economic coercion” and supply chain disruptions, veiled swipes at China. In response, China accused the US of attempting to “stoke division and confrontation” in the region and said Washington should stop “harming China’s interests.” 

Still, both sides have shown signs of seeking a more cooperative relationship. Chinese Premier Li Qiang told a business delegation Monday that it’s in the interest of both countries to maintain trade cooperation and ensure the stability of global supply chains. Hours later, the US lifted trade restrictions on 27 Chinese companies, a move that won praise from Beijing. 

The stakes are high all around. China is dealing with an economic slowdown as Xi looks to move away from debt-fueled growth to a more sustainable model of development, while also trying to produce its own high-end semiconductors. 

Nonetheless, Raimondo’s visit will be shadowed by the persistent tensions in US-China relations, over everything from security in the Taiwan Strait to a China-linked hack of several US officials’ emails – including Raimondo’s. Her trip is a prelude to the Group of 20 summit in India next month, where President Joe Biden is expected to come face-to-face with Xi, although it’s unclear if they will hold a one-on-one meeting.

The US has sought to emphasize its punitive measures are narrowly confined to core national security concerns, as it seeks to reassure allies that it’s not seeking full decoupling from China.

Raimondo needs to communicate that the curbs are “principle-based activities, and they are not seen as a geopolitical tit-for-tat or in some way done in a punitive way,” said Rob Strayer, the executive vice president of policy at the Information Technology Industry Council, a Washington-based lobbying group for high-tech companies. “That will help decrease the temperature on any new regulatory action taken under them.” 

The best-case outcome, he said, would be a regularized set of dialogues, rather than a more nebulous commitment to further conversation. 

Read more: Biden Narrows China Investment Order as US Seeks Better Ties 

For their part, Chinese officials are expected to “pitch a story” that it’s still a very profitable place for corporate America to operate, said John Gong, a professor at the University of International Business and Economics in Beijing who has worked as a consultant for China’s Commerce Ministry.

“I am modestly optimistic,” he said, because the Biden administration probably is realizing that all of its moves against China “are going a little bit too far.”

Although US domestic political concerns will limit what can be achieved, Gong saw room for progress in areas including a renewal of the Agreement on Cooperation in Science and Technology — the first pact signed after the US normalized relations with Communist-led China in 1979. 

China’s appeal to foreign investors has waned in recent years, with overseas companies wary of working in what they see as a difficult and unpredictable business environment. Earlier this year, China imposed a crackdown on consultancy firms that spooked foreign investors, many of whom have also found it hard to set up productive meetings when visiting Beijing.

Read more: Lawmakers Urge Against Export Controls Working Group With China

The fact that so many Biden officials have visited China is remarkable in itself, according to Paul Bracken, a political science professor at the Yale School of Management who focuses on global competition and technology. Those high-level contacts, he said, represent a restoration of normal global-power relations. 

“If you look at it from 2022 and 2023, the focus is going to be: Will an opening with one of our visitors lead to something?” he said. “Everybody agrees that has not happened.”

“But it might here,” he said of Raimondo’s trip. “China does have a higher interest in this for all kinds of reasons.” 

–With assistance from Jenny Leonard, Colum Murphy, Julie Johnsson and James Mayger.

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