Edward Lehman
In the dynamic world of international relations, fostering collaboration and nurturing partnerships is vital for a prosperous global future. This is especially true for the United States and China, the two largest economies in the world. As a US citizen who has lived and worked in Beijing for almost four decades, and is general counsel to AmChamUS, I have been fortunate to witness the evolution of this profoundly important relationship.
The recent high-level discussions between US Commerce Secretary Gina Raimondo and Chinese officials show the commitment of both nations to enhance cooperation and address global challenges with a positive outlook. Raimondo is the fourth high-level US official to visit China in recent months, as also the first US commerce secretary to do so in five years. The visit comes at a time when many commentators suggest that the China-US relationship is at a low point. However, such challenges are not at all surprising when one considers the rapidly changing economic, social and political nature of the world, and the magnitude of the relationship. As noted by the secretary: “It’s a complicated relationship. There’s no doubt about it. We are in a fierce competition with China at every level, and anyone who tells you differently is naïve.” She added, “We have to manage this competition. Conflict is in no one’s interest.”
Raimondo’s visit to China, and direct talking points, underscore the United States’ dedication to strengthening its relationship with China. These discussions at the highest level of government play a pivotal role in building trust and addressing pressing global challenges. During her conversations with Premier Li Qiang and Vice Premier He Lifeng, Raimondo emphasized the significance of open communication and tackled a range of concerns affecting American businesses in China. The commerce secretary stated that: “This isn’t about decoupling. This is about maintaining our very consequential trade relationship, which is good for America, good for China, and good for the world.” The message is clear: the United States does not seek to sever economic ties with China but rather aims to ensure that the relationship is mutually beneficial and stable. Raimondo stated that: “No commerce secretary has been tougher than I on China.” While we applaud the efforts of the administration to take a firm position, what is needed now more than ever is a common sense approach, and a way forward, which we believe can be accomplished by taking a practical approach to address issues one by one. We see the recent granting of air route rights by the US to China Airlines as exactly the type of common sense policy implementation which has win-win consequences for both sides.
With regard to trade, among the most contentious trade policies between the two countries has been the imposition of tariffs on China-made products, a policy that is mostly a continuation of one pursued by the previous administration. In return, China has imposed its own tariffs on US imports. Evidence shows that tariffs have resulted in job losses, hurt the US agricultural market and lead to higher prices. According to David Weinstein, an economist at Columbia University, “The tariffs protect the least efficient firms and reduced their incentives to innovate while hurting the most successful US firms, reducing their ability to innovate.” It seems the two countries can immediately achieve a breakthrough if they mutually agree to eliminate the tariffs.
Beyond addressing economic concerns, Raimondo also highlighted the importance of cooperation on broader global issues like climate change, the opioid crisis, and artificial intelligence. The Chinese side, in turn, expressed its desire for reduced export controls on advanced technology and the retraction of certain executive orders. While national security remains a top priority for the United States, it is evident that both nations recognize the potential for collaboration on critical global challenges.
Citing national security concerns, the Biden administration has imposed additional restrictions on export of high technology and investments in US tech companies. According to Raimondo: “We are not going to sell the most sophisticated American chips to China that they want for their military capacity. But I do want to be clear, we will also still continue to sell billions of dollars of chips a year to China, because the vast majority of chips that are made are not the leading edge, cutting edge that I’m talking about.”
In fact the Biden administration’s policies with regard to high tech only affect a very small percentage of the entire US-China economic relationship. By far the majority of US-China trade does not impact national security. China strongly opposes US’ restrictions on investments in China stating that it “violates the principles of market economy and fair competition”. In the short term these restrictions may reduce issues related to national security. In the long run, these restrictions will likely encourage China to improve its domestic industries, while depriving US companies of export opportunities. This effect can be seen in the new Huawei phone, which has an octa-core HiSilicon 5nm chipset CPU known as Kirin 9000s. Raimondo said that selling certain chips to China will ultimately generate revenue for American businesses to invest in further research and development. It remains to be seen if this is the case.
Chinese officials have welcomed Raimondo’s visit as an opportunity to reduce tensions and address concerns. It is heartening to see both sides engaging in constructive dialogue and emphasizing the importance of rational and practical policies. While obstacles may exist, it is crucial to remain positive about the potential for collaboration and mutual benefit. As we move forward, the two countries should continue to make progress in areas that are easily achievable, like eliminating tariffs. Raimondo insisted that “no one is more realistic than I am about the challenges” with China. We hope that both sides can be realistic about the upside that can come from cooperation and achieving cooperation as much as possible.
