Craig Allen: Which Path to Choose?

Jan 27 , 2021

Craig Allen, President of the United States-China Business Council.


Victor, firstly, thank you very much and many thanks to the China-U.S. Exchange Foundation and CCIEE. Very grateful to be here today. 

So the United States experimented with populism for four years. And it was tinged with an angry nationalism, a little bit of anti-foreigner sentiment, anti-elite sentiment, anti-institution and anti-science sentiments. And this experiment is associated with the presidency of Donald Trump. But of course, the underlying problems are much deeper. 

Populism is everywhere in the world, and it's fundamentally about dislocation and failure of the social contract and very rapid changes in technology in society. So with the election, some things have changed and some things have not. Both the White House and the Congress are in the hands of the Democratic Party, so that is a big change, but many things have not changed. Populism and polarization have not changed. COVID has not changed. Geopolitics have not changed. Technology competition with China has not changed. And China's policies toward the Biden administration have not changed — at least not yet. And as someone said, public perceptions in the United States about China are very low and, equally, public perceptions about the United States are low in China.

There are many reasons to be cautious here. The new administration will have to negotiate with the Congress, which is now still controlled by Democrats and is very skeptical of China. In addition, reminiscing about the Trump administration, Republicans will be waiting to criticize the Biden administration for any move on China. 

The Biden administration has a very strong team of national security and foreign affairs and trade experts. And this entire team is very pragmatic in principle and deeply knowledgeable about China. On trade, however, the Democratic party is very divided, President Biden has made it clear that the trade agreements are not going to be a high priority and his cabinet members have said they will keep the tariffs for the time being. So, while the Biden administration may not want to rush into talk about the trade agreement, I think the foreign leaders will want to talk to him about those same agreements, including our friends in China. 

This new team is very realistic. They realize that the economic architecture of Asia has changed with the RCEP, with the EU-China agreement, and with the Belt and Road. And the new team recognizes that this relationship with China is going to remain competitive, but the amount of confrontation should really be toned down. 

So I think that the business community in the United States would like to see a few things. Number one, sorry, Steve, I think that the bulk of the business community wants to keep the phase one agreement, and to implement it fully. It is valid for another year. Within the next year, the business community hopes that we can finalize the phase two agreement with China and leverage the EU agreement — the BIT negotiations that Steve referenced. Then indeed earlier negotiations, prior to May of 2019. And we believe that after phase two is reached, then the tariffs should come down.

Over the longer term, I think that both China and the United States should consider joining the CPTPP. Now that will be difficult for China, and it will be difficult for the United States, but it makes sense as both countries look at this as a very viable option going forward — to use the CPTPP vocabulary, structure, norms, regulations and agenda to move forward, our bilateral agenda, as well as the regional agenda. And I think if we have a virtuous discussion based around the CPTPP terms, that could also inform reform of the overall multilateral and WTO agenda, which of course is urgently needed. 

So, what I would propose is a virtuous discussion between the United States and China, using CPTPP as a structure and both enter the CPTPP, and use that for the reform of global institutions. 

Thank you very much.