Commerce Secretary Gina Raimondo said US companies tell her that China is becoming increasingly “uninvestible” because of growing risks to doing business in the world’s second-biggest economy.
(Bloomberg) — Commerce Secretary Gina Raimondo said US companies tell her that China is becoming increasingly “uninvestible” because of growing risks to doing business in the world’s second-biggest economy.
Raimondo, on a visit to China this week, said that US firms face new challenges such as fines and ambiguity around a new anti-espionage law, as well as continuing issues including intellectual-property theft and competition with subsidized Chinese firms.
“Increasingly I hear from businesses, China is uninvestible because it’s become too risky,” Raimondo told reporters while traveling from Beijing to Shanghai on a high-speed train.
Read more: Raimondo Stresses Optimism on Economic Ties With China’s Premier
“There are the traditional concerns that they’ve become accustomed to dealing with,” she said. “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.”
In discussions with top Chinese officials over the past two days, Raimondo said she raised a number of issues, including specific problems with Intel Corp., Micron Technology Inc. and Boeing Co., as well as other commercial issues. Meanwhile, China asked that the US lower tariffs, cut export controls and scrap plans to limit some forms of outbound investment, Raimondo said, emphasizing that she refused these requests.
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 that have become increasingly strained.
“Having Secretary Raimondo come here was very important for the business community because her number one job is to promote trade between the United States and China, and AmCham China feels that that’s one of the stabilizing forces in this relationship,” Michael Hart, the president of AmCham China, said in an interview with Bloomberg Television earlier in the day. For US firms in China, “the number one complaint for the last three years has been poor US China relations, and how that overshadows their business.”
As the main promoter of US industries and exports, Raimondo is seeking to boost trade and business while taking a hard line on security issues. On Monday, the two sides agreed to more dialogue on commercial issues and also agreed to set up regular meetings to share information about the enforcement of export control.
This new “information exchange” aims to build transparency and understanding about US laws, Raimondo said, but does not open the floor to negotiation. 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 drew a distinction between Beijing’s policies and the transparency she said the US has provided around export controls. She specifically referenced Micron, which was banned as a supplier 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 strictly 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.
(Updates with AmCham quote in seventh paragraph.)
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