AUGUST 28, 2023
BEIJING — U.S. Commerce Secretary Gina Raimondo said Monday it was “profoundly important” that the United States and China had a stable economic relationship, grounded in “direct, open and practical” communication.
Raimondo met her Chinese counterpart, Wang Wentao, in Beijing after arriving in the Chinese capital Sunday night, becoming the latest in a string of senior Biden administration officials to try to reset the relationship between the world’s two economic superpowers.
The secretary comes to Beijing seeking to stabilize business ties and boost exchanges with China without walking back the firm line that Washington has taken on restricting the development of advanced technologies like semiconductors and artificial intelligence. She is the first U.S. commerce chief to visit China in seven years.
She insisted that Washington was not seeking to curb China’s economic growth. “A growing Chinese economy that plays by the rules is in both of our interests,” Raimondo told Wang.
“It is profoundly important that we have a stable economic relationship; it’s to the benefit of both our countries and, in fact, what the world expects of us,” she said.
Both sides have framed the visit as an opportunity to bring practical dialogue to a tense, difficult relationship.
The secretary’s four-day trip includes meetings in Beijing and Shanghai with American business leaders, who have been caught between the Chinese government’s intensifying scrutiny of foreign firms and Washington’s push to prevent U.S. resources from fueling technology that could be used by the Chinese military.
Treasury Secretary Janet L. Yellen, Secretary of State Antony Blinken and climate change envoy John F. Kerry have all visited Beijing in the past two months in an effort to resume communications that ground to a halt when a Chinese balloon drifted across the United States in February and was dramatically shot down.
But even in those two months, the situation on the ground in China has changed dramatically.
Chinese Foreign Minister Qin Gang, who told Blinken in June that he would make a reciprocal trip to Washington, abruptly disappeared that month and was removed from his post without explanation.
The extent of the Chinese economic slowdown has also become increasingly clear, with many analysts predicting it will fall short of this year’s 5 percent growth target.
A woman rides an electric scooter next to a construction site in Beijing. The property market is teetering as the world’s second largest economy struggles to bounce back from the zero covid era. – Mark R Cristino/EPA-EFE/Shutterstock
“The economy in China is sour and in some respects getting further sour,” said Lester Ross, a long-standing member of the American Chamber of Commerce in Beijing and head of the law firm WilmerHale’s practice in the city. “They’re under pressure to attract foreign investment and make Chinese exports more acceptable around the world.”
But it is the real estate sector, teetering on the brink of a debt crisis, that is causing the most consternation.
The fragility of the sector was underscored Monday when embattled property developer Evergrande resumed trading on the Hong Kong Stock Exchange after a 500-day suspension and immediately lost 90 percent of its value.
At one point, shares for the company — once the largest builder and seller of real estate in China — traded for as little as three cents.
U.S. Commerce Secretary Gina Raimondo, second right, speaks during a meeting with Chinese Minister of Commerce Wang Wentao, second left, at the Ministry of Commerce in Beijing on Monday. – Andy Wong/AP
Seeing Raimondo on Monday, Wang, the commerce minister, said that Beijing was “ready to work together to foster a more favorable policy environment.”
He has previously insisted that China is open for business. The economic downtown makes China’s need for foreign investment even more acute.
But foreign investors in China have been spooked by increased scrutiny after raids on due-diligence firms and increasing use of exit bans.
It remains challenging for business people to enter China, and foreign firms fear their employees could be subject to scrutiny under Beijing’s expanded anti-espionage law.
Raimondo said she had spoken with more than 100 U.S. business leaders ahead of the trip and promised to raise their concerns.
The Commerce Department has imposed stiff export controls on Chinese technologies, which Beijing has denounced as a malicious attempt to suppress its companies.
Last month, Chinese cyberspies were revealed to have hacked Raimondo’s email account, exploiting a fundamental gap in Microsoft’s cloud. The hackers, looking for information useful to the Chinese government, had access to the email accounts for about a month before the issue was discovered and access cut off, officials said.
Beijing’s dissatisfaction with the controls may be the very thing that opens the door for a deeper dialogue with Raimondo than was had by other Biden administration officials, said Bill Reinsch, who was undersecretary of commerce for export during the Clinton administration.
“Raimondo has an extra card to play because she can initiate a dialogue on export controls since that’s her portfolio — and that’s something the Chinese want to talk about,” said Reinsch, now a senior adviser at the Center for Strategic and International Studies in Washington.
The Commerce Department has imposed stiff export controls on Chinese technologies, including semiconductors. Beijing has denounced the moves as a malicious attempt to suppress its companies. – Florence Lo/Reuters
In an effort to clear the way for Raimondo’s visit, the Commerce Department removed 27 Chinese entities from its “Unverified List,” saying none of these entities had been found to have ties to the Chinese military.
But the move came just weeks after the White House issued an executive order to prohibiting U.S. investment in Chinese entities involved in advanced military and surveillance applications, including semiconductor manufacturing and quantum computing. Further controls are expected in coming months.
The current controls affect just 1 percent of the $700 billion bilateral trade between the United States and China, Raimondo said in a call with reporters ahead of her trip.
The Biden administration’s approach to these controls is narrowly targeted and uncompromising — and there would be no room for negotiation on these, she said.
In China, too, analysts question whether more communication can improve business ties.
Raimondo may repeat that the United States is not seeking to decouple from China, said He Weiwen, a senior fellow at the Center for China and Globalization, said in an editorial published by the Chinese state-affiliated Global Times. “But the United States has said this many times. The key is to see what the United States has actually done, not what it has said.”
