Gina Raimondo had vowed to be direct and practical in her dealings with China and on Tuesday leaders in Beijing got a taste of what the US Commerce Secretary meant.
On a high-speed train from Beijing to Shanghai, Raimondo told reporters that US companies complained to her that China has become “uninvestible” – noting that fines, raids and other actions had made it risky to do business in the world’s second-largest economy.
China’s response to that blunt remark appears to have been understanding and positive, partly because their economy is in a grim state, with bilateral trade down 20% this year, but also because Raimondo is seen as having good intentions in her push for the world’s two biggest economies to have a more healthy trade relationship.
The commerce secretary is the latest Biden administration official to visit China in a bid to strengthen communications, amid concern that friction between the two superpowers could spiral out of control.
She insists the United States does not want to decouple from China, but her comment on the difficulties US businesses face have shone a harsh light on trade and investment flows between the geopolitical rivals.
Asked to respond to the comments Raimondo made in China, the spokesperson for the Chinese embassy in Washington, Liu Pengyu said that most of the 70,000 US firms doing business in China wanted to stay, that nearly 90% were profitable, and that Beijing was working to further ease market access for foreign companies.
“China is actively advancing its high-level opening-up and making efforts to provide a world-class, market-oriented business environment governed by a sound legal framework,” he said. “China will only open its doors even wider to the outside world.”
‘We wouldn’t use that term, but have similar concerns’
The Commerce Department declined to comment. But the European Union Chamber of Commerce in Beijing said on Wednesday it would not use the term “uninvestible” to describe China.
“‘Uninvestible’ is not a term we would use to describe China,” Jens Eskelund, president of the EU chamber, said in an emailed response to questions on Raimondo’s remarks.
He said that China was “under-invested” in terms of the amount of foreign direct investment it had been able to attract from Europe given the size of its economy, and noted that EU investment into China had been decreasing in recent years.
He raised similar concerns to Raimondo about China’s business environment, including ambiguous regulations and security issues.
“China can do much to turn this around,” Eskelund said. “But it would take clear, concrete and specific action in terms of removing some of the concerns presently weighing on companies when making investment decisions.”
Global investors, who have been spooked by unpredictable crackdowns on sectors from e-commerce to education in recent years, have been streaming out of Chinese assets lately.
Foreign net selling of 82.9 billion yuan ($11.4 billion) in Chinese stocks this month is a record outflow. Corporate investment is also going missing, with foreign direct investment at its lowest since records began 25 years ago.
Raimondo was in Shanghai, the country’s business capital, on Wednesday for the last day of meetings before returning to the United States.
Asked what her message was to US business in China, Raimondo said: “The message is to continue to do what you’re doing. We want you here investing, growing.”
She is pressing China to take actions to improve business conditions.
China was no longer seen as a “top three investment priority” by American firms for the first time in the 25-year history of the American Chamber of Commerce in China’s annual position paper, it said early this year.
‘Seeking a more predictable business environment’
Raimondo said American firms are facing new challenges, among them “exorbitant fines without any explanation, revisions to the counter-espionage law, which are unclear and sending shockwaves through the US community; raids on businesses – a whole new level of challenge and we need that to be addressed.”
She said there was “no rationale given” for Chinese actions against chipmaker Micron Technology, whose products were restricted by Beijing this year, and rejected any comparisons to US export controls.
Raimondo said this week she did not pull any punches in meeting with Chinese officials discussing the concerns of US businesses, including raising the treatment of Micron.
Raimondo, in opening remarks at a meeting on Wednesday with Shanghai Party Secretary Chen Jining, struck a positive tone saying she wanted to discuss “concrete ways that we can work together to accomplish business goals and to bring about a more predictable business environment, a predictable regulatory environment and a level playing field for American businesses.”
Chen said a stable relationship between China and the United States was crucial for the world. He said Shanghai had the highest concentration of US businesses.
“The business and trade ties serve the role as stabilizing ballast for bilateral ties. However, the world today is quite complicated. The economic rebound is a bit lacklustre. So stable bilateral ties in terms of trade and business is in the interest of two countries” and also the world community.
She will visit New York University’s Shanghai campus as well as Shanghai Disneyland on Wednesday, a joint venture of Walt Disney and Chinese state-owned Shendi Group and hold a press conference at a Boeing Shanghai facility before departing.
Raimondo, who has said China is blocking tens of billions of dollars in deliveries of Boeing airplanes to Chinese airlines, said she raised the airlines’ refusal to accept delivery of Boeing 737 MAX airplanes but won no commitments.
- Reuters with additional editing by Jim Pollard
NOTE: This report was updated with comments from the EU Chamber in Beijing on August 30, 2023, and minor edits on Sept 4.