Chinese officials warn US business delegation of higher tariffs risks

Chinese officials warned a delegation of top US executives visiting Beijing this week that higher tariffs on imports from China will harm their businesses inside the country.

The delegation of influential business people belonging to the US China Business Council, including the CEOs of FedEx and Micron, followed a top-level meeting last week where ruling Communist Party leaders endorsed a blueprint for policies that included numerous pledges to improve the business environment for foreign investors.

But they also vowed greater vigilance in protecting state secrets, a potential minefield for foreign businesses that face intense scrutiny of their China operations by authorities.

Both the US and China have cited national security concerns in imposing restrictions on trade and investment, and American businesses have at times been caught in the middle. Beijing has objected strenuously to Washington's moves to hike tariffs on Chinese-made products and limit Chinese access to advanced technologies, including leading-edge computer chips used for artificial intelligence.

The administration of President Joe Biden has sought to improve ties with China, including several meetings between Biden and Chinese President Xi Jinping, but has largely left in place sanctions ordered by former President Donald Trump, who imposed punitive tariffs on Beijing.

The Treasury Department also has proposed a rule that would restrict and monitor US investments in China for artificial intelligence, computer chips and quantum computing.

In his meeting with the group, Chinese Commerce Minister Wang Wentao emphasised that US investment restrictions on China will seriously affect the investments and operations of American companies in China, the ministry said in a statement. It provided no details.

The US China Business Council is a private, nonpartisan group of more than 270 American companies that do business in China. It said the visit to Beijing, just days after the Communist Party's four-day planning meeting, was intended to advance economic and policy priorities and support dialogue between US and Chinese government and business leaders.

We appreciate the opportunity to engage with Chinese leaders to promote commercial relations and advocate our priorities for the benefit of our companies and employees, the council's chairman and FedEx CEO Raj Subramaniam said in a statement.

Among others attending the meeting were Craig Allen, president of the council; Brendan Nelson, president of Boeing Global, Amit Sevak, president and CEO of Educational Testing Service, and Roberta Lipson, CEO of healthcare company Chindex International, which operates private hospitals in China and Mongolia.
 

 

Allen said the group hoped to build on past opportunities to realise a more stable, fair and predictable business environment in China, address longstanding and new barriers to China's market and to improve the relationship between the two largest economies.

Foreign Minister Wang Yi told the group he hoped they would use their influence and connections to provide an accurate picture of China and provide objective and positive voices to advocate for a correct understanding of China, the official Xinhua News Agency said.

As the first US business group to visit after the party's planning meetings, you can feel the new atmosphere of China's further deepening reform in an all-round way, the agency cited Wang as saying.

At the Communist Party meetings last week, officials endorsed more than 300 reform measures in line with leader Xi Jinping's vision for strengthening China's role as an economic power and leader in advanced technologies.

That included broad pledges to foster a first-rate business environment, remove market restrictions and promote trade. But the leaders also vowed to expand the party's role in business and to strengthen safeguards for national security.

A decree was approved Monday that provides regulations to implement a revised state secrets law that takes effect on September 1. Among other things, it toughens screening of people working with state secrets and bans them from travelling outside the country without approval in advance, even after they leave their jobs, state media reported.

The Chinese government has said such laws only target a small number of people who endanger national security. But foreign business groups have expressed unease over raids by authorities on foreign businesses in China and tightening restrictions on the handling of data.

Various new regulations have generated uncertainty and concern among businesses that need to know where the red lines are, Sean Stein of the American Chamber of Commerce in China told reporters in a recent briefing.

Companies don't want to endanger China's national security, but they need to know if they're making an investment, who they're investing with, Stein said. So without the ability to collect that information, not knowing if it's not going to run afoul of China's state secrets laws is a real problem.