AmCham China typically undertakes an annual trip to Washington, DC in early May to meet with administration and congressional officials, policymakers, and think tanks to exchange views on US-China trade relations. As travel restrictions due to COVID-19 remained in place this past year, AmCham China’s 2022 DC Outreach was conducted virtually for the third consecutive year. This year’s delegation included 16 representatives from AmCham China’s Chairman’s Circle, Policy + members, Board of Governors, and Executive Policy Community.
AmCham China presented member concerns drawing from the 2022 COVID-19 Flash Surveys, 2022 China Business Climate Survey Report (BCS) and the 2022 American Business in China White Paper (White Paper). The delegations presented these talking points in all 22 meetings held with DC based policymakers. Selected takeaways can be found below:
Despite the many challenges facing the US-China economic relationship and the China business environment, it is imperative for the US economy and the global competitiveness of US companies that we find a way to cooperate and compete with China, and that US companies remain an active and positive force in China.
Given these realities, AmCham China recommended the following to US-based partners:
- Prioritize domestic investment in education, training, R&D, and science and technology for America to thrive and ensure its national and economic security.
- Coordinate with allies and partners to establish the rules of the 21st century economy.
- Focus on rebuilding mechanisms for US-China communication at all levels, in all spheres of the bilateral relationship.
Insights from Virtual DC Outreach Engagements
2022 was a challenging and dynamic year for the US-China bilateral relationship. With ongoing COVID-19 travel restrictions limiting in-person government engagement, the relationship relied largely on high-level virtual discussions to confront some of the most challenging, values-based conflicts in the relationship. The US introduced new China-focused legislation on issues of labor rights and technology that further complicated the bilateral relationship.
Alongside the planned government milestones on both sides, with the China 20th Party Congress and the US midterm elections, some watershed moments occurred this year, the most notable of which was US House Speaker Nancy Pelosi’s visit to Taiwan and the resulting aftermath. Following House Speaker Pelosi’s visit and the subsequent cut of eight channels of communication, the relationship is finally seeing some resolution after Biden and Xi’s in-person meeting alongside the G20 Summit in Indonesia this November.
While some themes were recurring this year, new topics emerged at the core of policymakers concerns regarding American business operations in China and the bilateral relationship as a whole. The most prominent new topics are outlined below.
Four key topics emerged through discussions with various interest groups and policy makers in Washington D.C. These issues are at the center of US based discourse on China and have picked up steam in the past year, likely securing their place as concerns for years to come.
DC-based experts note that market and public reaction to Pelosi’s visit to Taiwan “overweighted near-term risk and underweighted medium-term risks in the Sino-American relationship.” While the initial rise in tension and subsequent military exercises posed a risk as a potential flash point, the lasting tensions and uncertainty surrounding Taiwan’s future will have a greater impact on the commercial relationship with Taiwan in the end.
Despite this, many US based partners made the point that “neither US nor China sees escalation over Taiwan as beneficial, and both sides made deliberate efforts to avoid an escalation.” While businesses may look to replicate any commercial partnerships they have in Taiwan, the actual status quo regarding Taiwan’s relationships with the US and China is unlikely to change in the near term.
Proposal of the Taiwan Policy Act of 2022 has the ability to build on the Taiwan Relations Act of 1979 and further promote “the security of Taiwan, ensure regional stability, and deter People’s Republic of China (PRC) aggression against Taiwan. It also threatens severe sanctions against the PRC for hostile action against Taiwan.” The passage of this Act would likely result in a strong response from PRC officials, bringing the Taiwan issue back to the forefront of bilateral tensions.
Supply Chain Resilience
Experts in DC recognize that supply chain resilience is a defining concern of the COVID-era. One expert notes that, “in Asia, there is widespread understanding about the need to diversify supply chains and reduce the number of sectors for which China is the only supplier. But this comes with a recognition that it’s impossible to fully eliminate dependence on China because China is a huge manufacturer. Most businesses recognize that China needs to become part of supply chain resilience in some sectors.”
According to the 2022 Business Climate Survey Report, only 27 of 353 members noted that they were planning to relocate their operations out of China. Many members have noted, however, that their company is not relocating their supply chains entirely but implementing a strategy of planned redundance in order to combat ongoing supply chain uncertainties largely caused by China’s COVID-19 prevention measures this year.
Multiple members of Congress asked supply chain questions as it related to the business operations and supply issues experienced by their constituents. Over-reliance on Chinese supply chains is top of mind for many partners in DC.
Technology & Security
Technology development and national security were core concerns for many experts and members of Congress that met with our delegation. Member companies underscore that IP protection was a core part of their China and overall global business strategies. Members of Congress and the administration note that ensuring self-reliance in emerging technologies is key to the US strategy for economic and overall national security in the medium to long term.
This year also saw the passage of the historic CHIPS and Sciences Act. Experts note that “the US government hasn’t pursued serious industrial policy since the Apollo program, and that was a government program, not a commercial program. The US government has always practiced some industrial policy, but this industry-specific effort is novel.”
Member companies raised concerns regarding timelines for removing reliance on global supply chains related to certain areas of technology development and advocated for a long grace period and clear compliance guidelines for companies operating in these high-tech sectors. Members note that rebuilding capacities in the US or “friendly” markets would take a matter of years, not months, to be operational.
Chinese Investment in US
From a policy standpoint, Chinese investment is still welcome in the US. Select USA, the FDI recruitment programming run by the Department of Commerce (DOC), is geographically neutral. DOC is committed to welcoming FDI regardless of geographical origin, although all investment will be subject to screening criteria. At the most recent “Select USA Summit,” there was still a robust Chinese presence.
Despite this, experts note that, “Chinese investment flows in the US have dropped sharply. Ten years ago, there was very little Chinese investment in the US, then there was a rapid surge for a few years, which has now basically disappeared. Most of Chinese investment into the US was through M&As.”
Members of Congress were wary to state if they would personally welcome Chinese greenfield investment into their districts. After some high-profile investments in North Dakota and Georgia sparked local and national level debates, many members of Congress note that their constituents may not approve such investments even if they led to new local jobs.