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Twin Pressures, Uncertainties, and High Hopes

May 17, 2021

2020 was an unprecedented year for the American business community due to twin pressures from a deteriorating US-China bilateral relationship and the very real human and economic challenges created by the COVID-19 pandemic. China’s success at controlling COVID-19 domestically is commendable and has played a large part in ensuring our member companies were largely able to resume regular operations in China by the middle of Q2 of this year. By the year’s end China’s economy had reported GDP growth of 2.3 percent, the only major economy in the world to do so.

Even so, COVID-19 created many challenges for our members with respect to their business operations. Among the most significant have been global travel disruptions stemming from restrictions imposed to control the spread of COVID-19. China temporarily banned foreigners holding valid residence permits from entering the country, while the US restricted its own visa services in China and many parts of the world. This left many business executives, families, and teachers outside of China unable to return and drastically reduced the level of business and people-to-people exchange taking place between the US and China and around the world.

I am proud of the ways in which AmCham China responded to COVID-19, that is, ways that reaffirm its role as an essential bridge between the two countries. In January and February following the outbreak of COVID-19 in Hubei Province, our members mobilized over 600 million RMB of financial aid, supplies, and equipment to the areas of Hubei most affected by the outbreak. As COVID-19 spread to the US, in March AmCham China set up a volunteer member task force to source personal protective equipment (PPE) in China and enable it to reach medical facilities, hospitals, and other places in America where it was needed the most. And in September, with the help of both the China and US governments, we organized our first ever charter flight from San Francisco to Beijing. On the flight were nearly 100 business executives, employees, educators, and their family members who work in China.

In 2020, we witnessed a continued deterioration of US-China relations in almost all respects, including in the national security, law enforcement, news media, and people-to-people exchange spheres. There has also been a concerning end to almost all mechanisms for bilateral communication between the two governments. Exchanges between both sides were characterized by a deep mistrust and the rhetoric continued to be unproductive and inflammatory.

This has created a great degree of uncertainty for the business community; consequently, rising bilateral tension was identified by our members as the leading challenge to their business operations in China.

The US-China Economic and Trade Agreement (Phase One Agreement) signed in January 2020 remains a bright spot in the relationship and one where limited, but constructive bilateral discussions continue. AmCham China supports the Agreement, and it is our understanding that officials from both sides intend to honor their commitments. We remain laser focused on implementation and will continue to support the Agreement by providing information regarding implementation in a timely and transparent manner to both sides. Successful implementation will benefit from a return to committed and nuanced diplomacy from both sides and close consultation with the business community.

The Phase One Agreement includes a number of important commitments to strengthen intellectual property provisions and end the practice of forcing foreign-invested enterprises to transfer their technology in return for access to the Chinese market, among other commitments. Nevertheless, we are aware, that much work remains to be done to resolve the structural issues like market access barriers, discriminatory regulation and enforcement, and intellectual property protections discussed across these many pages that have long hindered importation of US goods and services and operations of US businesses in China. High-level commitments to continued economic opening for foreign business and a level-playing field must be met by faithful, transparent, and prompt implementation on the ground.

China is a priority market for over two thirds of our members and our surveys indicate that nearly 85 percent are not considering relocating manufacturing or sourcing from the China market. In order to be globally successful, American companies need to be competitive in the China market. A wholesale decoupling of the US and China economies is in neither country’s economic interest. While we respect the need of both countries to define and defend their legitimate national security interests, we urge that such considerations be defined as narrowly as possible so as to permit commercially focused exchange to take place. We will continue to judge progress based on the on-the-ground results and experiences of our member companies.

We will not hesitate to properly recognize areas of real progress, in addition to highlighting those areas that still need work or pointing out gaps between regulatory policies as written and as implemented or enforced in practice.

Additionally, we hope that any effort to rebuild a healthy working relationship between the US and China enables the two sides to identify areas of global benefit to humankind and define common purpose in these areas. Of particular relevance are climate change and global public health, areas in which multilateral agendas to address these challenges must involve US-China cooperation. Our member companies have expertise and technology that can play a role in addressing these challenges and AmCham China welcomes the opportunity to be a platform for cooperation.

Therefore, at this critical time, we are publishing our 23rd annual White Paper - a comprehensive analysis of China’s economic policies and practices impacting foreign trade and investment. We have been gratified by the close attention American and Chinese policy makers have paid to the White Paper in past years. In this edition, we have endeavored to offer a comprehensive set of recommendations for both sides as they work towards greater mutual understanding and successful resolution of our many outstanding concerns.

Whether one studies this year’s White Paper from A to W (or from “Agriculture” to “Work Safety and Emergency Management”), or to investigate specific topics, we hope that the 2021 AmCham China White Paper will once again be an important tool facilitating mutual understanding and advancing our bilateral economic relationship. 

(The text is a speech delivered by Greg Gilligan at May 11 AmCham China annual meeting in Beijing.)

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