Gina Raimondo, the Commerce Secretary, who arrived in Beijing on Sunday, is the latest emissary from the Biden administration seeking to stabilize ties between the world’s two largest economies.
Ms. Raimondo, the fourth senior US official to travel to China in less than three months, is making her trip at a critical time. Relations between the countries are tense, in part because the United States has curtailed China’s access to technology that could power its military. China’s economy also appears to be slowing, and Beijing is trying to attract more foreign investment while tightening controls on foreign companies.
Ms. Raimondo’s agenda is varied, including economic diplomacy, getting to know China’s new economic team and defending the interests of US companies and their employees. Both US and Chinese officials have hinted that while many of the big issues are unlikely to be resolved at these meetings, there may be a few areas where the two sides could move closer to an agreement.
Here’s a look at the issues expected to dominate the journey.
Technology war between USA and China
An important topic for both sides will be the increasing restrictions on trade in advanced technology between the countries, especially those imposed by the United States. Ms. Raimondo’s department oversees the export controls and other restrictions put in place by the Biden administration, many of which have angered Chinese officials and led to retaliation.
This month, the Biden administration announced plans to ban private equity and venture capital firms from investing in quantum computers and advanced semiconductors in China. While these restrictions were not as drastic as some expected, Chinese officials are still saddened by the government’s decision last October to place significant restrictions on the types of advanced semiconductors and chip-making machines that can be shipped to China. sent.
A new, bipartisan law aimed at strengthening the US semiconductor industry has also baffled Chinese officials, especially as it prohibits companies that accept federal money from making new, high-tech investments in China.
China has had its own much broader restrictions on most foreign investment by Chinese companies and households since 2016. Chinese officials recently began regulating the export of metals used to make chips, scuttled a planned merger between Intel and an Israeli chipmaker, and banned some of the sales by US chipmaker Micron, prompting the company to estimated to cost about one-eighth of its sales. global revenue. The action against Micron and Intel was seen by some Chinese experts as retaliation for the Biden administration’s harsher treatment of China’s technology sector.
In an effort to avoid an economically damaging tit-for-tat, Ms. Raimondo is expected to speak about US rationales and make it clear that their efforts are aimed at protecting homeland security.
Ms Raimondo said in a briefing with reporters ahead of the trip that a main purpose of the visit will be to “explain and further make transparent the national security strategy for the protection of critical technologies.”
Yet, she said, the enforcement of these rules is “not in question, not in question, not in question, not even in question. But it is important that we are transparent with the Chinese and that our national security policies are understood by our counterparts in the People’s Republic of China to avoid misunderstandings, avoid unnecessary escalation and avoid miscalculations,” she said, referring to the People’s Republic of China.
A deteriorating business climate for foreign companies
In addition to raising concerns about China’s treatment of Micron, Ms. Raimondo is expected to raise complaints from other Western companies who say they are increasingly concerned about inadvertently triggering China’s extensive national security laws.
In March, Chinese authorities arrested five Chinese who worked in Beijing for the Mintz Group, a US consulting firm, and in April, authorities questioned employees at the Shanghai office of Bain & Company, the US management consultancy. The Chinese government this month fined Mintz $1.5 million for doing unapproved statistical work.
Global managers now regularly raise concerns about performing routine business activities, such as performing due diligence on acquisition targets or transferring data between subsidiaries. US multinationals have begun preparing contingency plans in case their workers are detained in China, returning very few expatriates who evacuated the country during the pandemic.
These concerns, along with technology controls, tariffs and other trade barriers, have most likely contributed to a trend of declining foreign investment in China.
“People are afraid to go to China,” said Susan Shirk, a research professor at the 21st Century China Center at the University of California, San Diego, and author of “Overreach: How China Derailed Its Peaceful Rise.”
“These concerns about physical security are really putting a damper on interactions at both the commercial and academic levels,” she added.
Promoting commercial ties in other fields
Despite a colder atmosphere, Ms. Raimondo and other officials emphasize that there is still plenty of potential for trade between the world’s two largest economies. China remains America’s third largest export market, buying more than $150 billion worth of products from American farms and companies.
Ms. Raimondo noted that US export controls affect only 1 percent of bilateral trade between the countries. Exports to China support more than 80,000 jobs in the United States and benefit both small and large businesses, she said. The United States also continues to import hundreds of billions of dollars worth of products from China each year.
Ms Raimondo said a key purpose of the trip would be to promote commercial ties, aligning with US interests, by calling tourism and “people-to-people exchanges.” As an example, she pointed to the recent US move to reinstate group travel from China to the United States, saying a return to the level of Chinese visitors in 2019 would bring $30 billion to the US economy.
Government communication
A more fundamental, but still fundamental, part of the journey is promoting communication between the United States and China. Those channels have seriously deteriorated after the fallout from a Chinese surveillance balloon that flew over the United States early this year, and China’s Defense Secretary continues to refuse to speak with US Defense Secretary Lloyd J. Austin III.
Ms Raimondo said she spoke with President Biden on Thursday and he asked her to deliver a message to China’s leaders: “We must communicate to avoid conflict.”
This will be the first trip to China by a US Commerce Secretary in seven years, Ms Raimondo said. She is expected to have the chance to meet several members of a new economic team that has taken office since the Communist Party held its once-every-five-year national convention last fall.
“There are benefits to communicating to reduce tension,” she said. “That doesn’t mean compromise, that means communicating.”
Economic slowdown and transparency
During the visit, concerns loom over China’s recent economic slowdown and how it could affect the global economy and future bilateral relations.
Economists and observers have expressed concern over a decision by China’s Bureau of National Statistics this month to stop publishing monthly unemployment information “for youth and other age groups,” which recently hit an all-time high.
The agency said it needed to optimize its surveys. But the decision, along with the suspension of tens of thousands of other data series in recent years, led to the suggestion that China was trying to hide negative economic data.
Jake Sullivan, the White House national security adviser, said Ms. Raimondo was expected to discuss China’s economic data during her trip.
“We believe in openness, transparency and reporting,” Mr Sullivan said on Tuesday. “And we think it is important for global confidence, predictability and the rest of the world’s ability to make good economic decisions that China also maintains a level of transparency in the publication of its data.”