Raimondo Revives China Business Talks But Delivers No Deals

US Commerce Secretary Gina Raimondo won a promise to revive business talks between Washington and Beijing, a key step as both sides look to ease tensions. But American firms were left wondering if that will be enough to recommit to a market that looks increasingly risky.

(Bloomberg) — US Commerce Secretary Gina Raimondo won a promise to revive business talks between Washington and Beijing, a key step as both sides look to ease tensions. But American firms were left wondering if that will be enough to recommit to a market that looks increasingly risky.

Raimondo ended a visit to Beijing and Shanghai with a pledge to restore the sorts of formal communication channels that had been severed over years of deteriorating ties. That will provide some predictability to US businesses, she said, who have told her they consider China increasingly “uninvestible” due to rising risks. 

“It’s the beginning,” Raimondo, a former venture capitalist, told US business leaders at an event hosted by AmCham Shanghai. She later told reporters: “I have no expectation that on my first visit, after my first meetings with Chinese officials, we would suddenly resolve specific issues.”

While it might not have seemed like much, the absence of those conversations had left the world’s two biggest economies barely able to communicate on some of the biggest issues that divided them. And the commitment to regular meetings — one on commercial issues and another on export controls — was more than two fellow Biden administration Cabinet officials had secured in recent visits. Treasury Secretary Janet Yellen and Secretary of State Antony Blinken both returned without much more than a loose promise to keep talking.

For all those trips, Raimondo was the one China really wanted to see. As commerce secretary, she oversees the export controls that have throttled Chinese companies like Huawei Technologies Co. At the same time, a positive signal from Raimondo could spur the investment China needs to revive its slowing economy and reverse a 25-year-low in foreign direct investment.

Given the issues that divide the two countries, the biggest surprise may have been how warmly Chinese officials received her. Premier Li Qiang said in a meeting with Raimondo that China is pressing ahead with efforts to ease market access and treat companies in the same manner it does domestic firms. 

President Joe Biden and Chinese leader Xi Jinping are set to come face to face at the Group of 20 summit in India next month and could meet in San Francisco later this year. That meeting has been a priority for the US, and officials will wait for any sign that Raimondo made progress on securing a leader handshake. 

Even so, the visit underscored just how hard it will be for Biden to bring ties with China back to any semblance of normalcy. Beijing gave no indication it would revisit a partial ban on Micron Technology Inc., and Raimondo rebuffed a Chinese request to lift tariffs, the recent order limiting some investment and export controls limiting the flow of sensitive technology. 

“In her own words, what Raimondo achieved was to restart dialogue,” said Jennifer Welch, chief geoeconomics analyst at Bloomberg Economics. “If both sides can accept lowered expectations and work toward marginal improvements and avoiding major risks, that’s perhaps the best we can expect.”

Read more: Raimondo Says US Businesses See China Becoming ‘Uninvestible’

The site of her final press conference in China was emblematic of the trip’s shortcomings. Raimondo spoke at an airport in Shanghai flanked by two Boeing planes in a hanger owned by the US aviation giant. Expectations had been high for an announcement on resuming shipments of its 737 Max jets to China for the first time since 2019.

Raimondo hopes that the benign share of US-China trade — things like travel and tourism, beauty products and educational exchanges — can help compensate for some of the geopolitical tensions. She was the first Biden official to visit Shanghai, China’s commercial capital, and she repeatedly told the Chinese that the US wants China to have a strong economy. 

To underscore that point, Raimondo toured Disneyland Shanghai, where the speakers were blaring the song A Whole New World from the movie Aladdin upon her arrival. It was a stop designed to highlight the kind of US investment that can still thrive, and to demonstrate the popularity of American culture even as tensions have soared.

One of the challenges is what could be coming soon, especially if former President Donald Trump reclaims the Oval Office next year. Representative Michael McCaul, the Republican chairman of the House Foreign Affairs Committee, called the new dialogue Raimondo set up “at best naive, but also dangerous.” Republican presidential candidate Nikki Haley said: “The time for polite talk is over.”

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

Whether the US controls on the sale of semiconductor technology will even be successful is still an open question. Reports emerged during Raimondo’s visit that Huawei had unveiled a smartphone that appeared to use technology Raimondo’s office has sought to keep out of the company’s hands.

One former government and industry representative worries that Raimondo’s communication channels could tie her hands in the future, leading her to delay necessary export controls in favor of maintaining a dialogue with a government that won’t meaningfully engage.

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And while the new US-China forums are a confidence boost, Raimondo’s visit didn’t do enough, according to one US executive who met with her during the trip. The only way to change Chinese behavior is to impose additional costs on Beijing, said the executive, who asked not to be identified discussing a private conversation.

That sentiment was a sign of just how sour US businesses have become on China given all the challenges they face.

But for all the recent strain, there could be opportunity for concrete commitments in the coming months, according to Wendy Cutler, vice president at the Asia Society Policy Institute.

Raimondo’s new communication channels “appear to be very modest outcomes,” Culter said. “But given the state of US-China relations, each step forward is important.”

–With assistance from Philip Glamann, Peter Martin, Colum Murphy, Jasmine Ng and Jenni Marsh.

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