Glimpses of Road Ahead for U.S.-China Commercial Relations
Want to see what’s down the road in U.S.-China commercial relations? Here are three revealing glimpses provided courtesy of the U.S.-China Business Council:
China's retaliation against President Donald Trump's duties on more than $250 billion worth of Chinese goods has entered a second, more subtle phrase, a former top US diplomat said today. I work with American, largely American businesses, that are engaged deeply in China," Kurt Campbell, chairman and CEO of The Asia Group, said in a speech at The Atlantic Council. "Without revealing any details, I would say over the course of the last week, of 50 or so interlocutors in Asia, more than half have called and said 'We suddenly have a problem.'" Most of the difficulties have not yet been reported by the media. But companies have called to say that "suddenly their warehouse has been raided," Campbell said. "Or maybe a movie company, the movie that they wanted to be able to show, suddenly the airplane has not manifested for the movies, or the bank records need to be reviewed again." "What we're seeing now is phase two in the Chinese approach," said Campbell, who served as the assistant secretary of State for East Asian and Pacific Affairs in the Obama administration. "Now, it's going to be a subtle message that if you proceed down this path, we're going to retaliate against American firms," Campbell said.
2. China wants to pressure the US economy, but the finance sector is probably safe from Beijing
Technology, rare earth minerals and the education sector have been dragged into the scuffle between China and the US, but as Beijing considers more countermeasures, experts said America’s financial sector is unlikely to be a target. There’s just too much at stake for China in that area, they told CNBC this week, pointing to an ongoing drive in the country to open up the Chinese financial sector to global investors. “We believe that the financial regulators (in China) ... are looking at ways to really reform, make it more liquid, bring more transparency. We haven’t seen any shift in that attitude yet,” Douglas Peterson, president and chief executive at financial services and ratings giant S&P Global, told CNBC on Friday. Speaking at the Institute of International Finance meeting in Tokyo, he said that any move to target financial services would be “unusual,” because the Chinese “need access to global financial markets.” “The Chinese government wants US and European financial institutions — they are opening up the market. What I heard from Chinese authorities is ... ‘we want the financial community to be here,’” he told CNBC.
3. Vietnam Can’t Be the Next China
The good news is in for Vietnam. Last week the Ministry of Planning and Investment announced that foreign direct investment in the country increased by nearly 70 percent year-on-year in the first five months of 2019, the highest such increase since 2015. Much of that is thanks to US-China trade tensions that have left US firms and others much less certain about investing in the mainland. While Vietnam has been steadily poaching investment from its northern neighbor for years, businesspeople themselves have mentioned the discord between Beijing and Washington as a reason for moving south. Optimism for future growth is omnipresent, with one Quartz article going so far to describe Vietnam as a “a kind of China in waiting.” But Vietnam, independent country that it is, has none of the benefits that come with being a province of a vast, economically diversified nation with the world’s largest workforce. According to Beijing’s most recent national census, conducted in 2010, around one-third of Guangdong’s population of 104 million were migrants from elsewhere in China. The factories in the Pearl River Delta churning out iPhones and Nike sneakers can rely on a steady stream of migrants from across China to man the assembly lines, while Vietnam has only itself to turn to.?