US Commerce Secretary Gina Raimondo argued that China is driving away American companies by making investments in the world’s second-biggest economy increasingly hazardous.
(Bloomberg) — US Commerce Secretary Gina Raimondo argued that China is driving away American companies by making investments in the world’s second-biggest economy increasingly hazardous.
“Increasingly I hear from businesses, ‘China is uninvestible because it’s become too risky,’” Raimondo told reporters Tuesday aboard a high-speed train from Beijing to Shanghai. “There are the traditional concerns that they’ve become accustomed to dealing with. And then there’s a whole new set of concerns, the sum total of which is making China feel too risky for them to invest.”
The comments by Washington’s top trade promoter underscore that commerce has become one of the main strands of tension between the two powers, even as she and the Chinese officials she met with this week stressed that economic ties are key to sustaining a working relationship.
Read more: Raimondo Stresses Optimism on Economic Ties With China’s Premier
Raimondo said that US firms face novel challenges such as fines and ambiguity concerning China’s new anti-espionage law, in addition to existing issues including intellectual-property theft and competition with subsidized Chinese firms.
Raimondo is the latest high-level official from the Biden administration to travel to China in recent months as part of an effort by the White House to ease tensions between the two powers. Tensions have been high for months over multiple issues, from the future of Taiwan to a China-linked hack of US officials’ emails — including Raimondo’s.
Although it’s not clear whether the commerce secretary will meet with President Xi Jinping before her trip concludes Wednesday, she’s already spoken with officials including Premier Li Qiang, the country’s No. 2 leader. Raimondo also attended a four-hour bilateral meeting with her Chinese counterpart Wang Wentao on Monday.
Read more: Raimondo Says Trade Can Stabilize US-China Relationship
Li called economic ties between the two nations the “ballast and anchor of stability” and said that “we do hope the US side will work in same direction as the Chinese side, show sincerity and take concrete actions to maintain and further develop the bilateral relationship.”
The premier also told Raimondo that China is working to ease market access, treat foreign companies the same as domestic firms and promote fair competition, as well as opening its doors wider to the outside world, according to a statement from the country’s foreign ministry.
The two sides said in separate statements that they aim to cooperate on shared challenges, including climate change and the fentanyl crisis.
Raimondo is seeking to boost trade and business while taking a hard line on security issues. In discussions with top Chinese officials over the past two days, Raimondo said she raised a number of commercial issues, including specific problems involving Intel Corp., Micron Technology Inc. and Boeing Co.
“Having Secretary Raimondo come here was very important for the business community because her No. 1 job is to promote trade between the United States and China,” Michael Hart, the president of AmCham China, said in an interview with Bloomberg Television earlier in the day. That economic connection is “one of the stabilizing forces in this relationship,” he said.
On Monday, the two sides agreed to more dialogue on commercial issues and to set up regular meetings to share information about the enforcement of US export controls, which were imposed by President Joe Biden’s administration to limit Beijing’s access to semiconductor technology.
Raimondo emphasized on Tuesday that opening lines of communication wouldn’t result in Beijing influencing US policy. She said she refused requests from Chinese officials during the visit that the US lower tariffs, cut export controls and scrap plans to limit some forms of outbound investment.
This new “information exchange” aims to build transparency and understanding about US laws, not open the floor for negotiation, Raimondo said. The group hosted its first meeting at the assistant secretary level earlier in the day Tuesday and agreed to discuss issues around trade secrets.
“The very fact that now we would have informal communication, be able to pick up the phone and talk, is a step forward,” Raimondo said. “It doesn’t mean when we talk, I’m going to compromise or concede. It means we have a shot at reducing miscalculation and sharing information.”
Raimondo also sought to draw a distinction between Beijing’s policies and the transparency she said the US has provided about export controls. She specifically cited Micron, which Beijing banned as a supplier of semiconductors for critical infrastructure in May, as the Chinese government said that there was a national security risk.
“Our export controls are clear, are transparent,” she said. “There’s been no rationale given around what’s happened to Micron. There’s been limited due process, and that’s why I brought it up.”
The US made clear to the Chinese government that export controls are used only for national security purposes, not competitive advantage, Raimondo said.
However, Chinese government subsidies creating overcapacity – whether in the legacy chip sector or in steel or aluminum – are bad for the market and US companies, she said.
The US won’t use export controls to deal with any chip glut but would use other tools at its disposal, she said. Last month, Raimondo specifically called out Chinese subsidies of legacy chips as a problem for the US and its allies.
–With assistance from Lin Cheng, Li Liu and Jacob Gu.
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