Room to negotiate seen for US-China commerce

Two foreign policy experts say the US and China can work out their commercial relationship, which would be a long-term process.

"This is good as long as both sides are willing to behave positively and focus on solutions rather than on blame," Jack Midgley, the principal of global consultancy Midgley & Co told China Daily.

US Commerce Secretary Gina Raimondo was the latest high-level official from the Biden administration to visit China. The trip came at a time when there are concerns that growing tensions between the two major global powers could escalate.

Raimondo met with a number of senior Chinese officials during her trip to Beijing and Shanghai from Aug 27 to Aug 30.

The two sides agreed to increase communications and to an annual meeting of commerce ministers; a new "export control enforcement information exchange" mechanism; and a "commercial issues working group", a new high-level dialogue between China and the US tourism industry.

Midgley said that both the US and China were "obviously interested in a good outcome" for Raimondo's trip. "That's not a matter of emotion. That's a matter of hard economic interest," he said.

"So, the real question is a pragmatic question. Are the two sides going to continue to do the hard daily work of negotiating trade agreements and advancing the economic development of both countries?" he asked.

Export controls, Midgley said, are always "a stumbling block" in a bilateral relationship. The export mechanism "will provide both sides with the information they need to reduce export controls step by step, transaction by transaction", which is "a good thing for both sides".

He said that because the US and China represent more than 40 percent of global GDP, "removing obstacles to that relationship is a very important step for the world and for the two countries".

"This was a good accomplishment and a testimony to the willingness of both sides to work patiently and pragmatically on the relationship," said Midgely.

Raimondo said at a media briefing on Aug 30 in Shanghai that she is hopeful about holding regular and direct talks with Chinese officials but that she is "very clear-eyed" and does not expect every issue between the US and China to be resolved "overnight".

In Midgley's analysis, some technologies, like software, microprocessors, communications equipment and robotics are key to China's development.

China must develop those technologies while the US wants to maintain an edge, he said. "So this is where the US-China trade relationship becomes complicated and where it has to be managed one piece at a time, one transaction at a time," he said.

Raimondo said there was "no room to compromise" with China on national security.

"She's not speaking to the Chinese side. She is speaking to the Americans," Midgley said of the comment.

He said that when Raimondo mentioned national security, she meant artificial intelligence, advanced computing capabilities, advanced materials, et cetera.

"And those things are important for national security, but they are also the key drivers of economic development for the United States and for China," Midgley said. "Of course we are going to negotiate these technologies; these dual-use technologies are the main challenge in the US-China trade relations today.

"That's exactly where we are going to negotiate. We have to negotiate to reach solutions that are acceptable to both sides," he said.

However, Sourabh Gupta, a senior fellow at the Washington-based Institute for China-America Studies (ICAS) told China Daily that "the room for negotiations on the US' dual use technology controls regime is a narrow one".

He said the US' view is primarily to improve market access and the business environment for American companies doing or seeking to do business in China.

Gupta also said that the area "most amenable" to talks about improving the business environment related to foreign companies in China because there is a mutual desire on that front.

"The Chinese government would like to ramp up private sector investment, including by foreign businesses, and to this end, it recently put out a State Council opinion that was well-received by the foreign business community," he said.

"At the US' end, it would of course like its businesses to make greater inroads in the Chinese market and fatten its profits — although I think there is an overestimation at the US government end as to what it can achieve for American businesses in China given that the Biden administration itself has been willfully creating an inhospitable business environment for Chinese businesses in America," Gupta said.

"Be that as it may, this is one of the few areas where the two sides can provide mutually beneficial assurances to each other," he said.

"The idea that China is 'uninvestable' is just nonsense," Midgley said. "Money is pouring into China. Foreign investment continues to pour into China. It's in China's interest to make sure that it's an attractive place to invest."

The experts are not optimistic about shortening the blacklist of Chinese companies — for the US export restrictions or the investment ban.

"At best, there is hope for only a marginal few to be delisted, and that too only if a core US interest is involved," said Gupta.