Page 168 - 2021 White Paper
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1 White Paper on the Business Environment in China
members, even as China grows more sophisticated integration. In addition, with the US absent from
in its use of economic carrots and sticks. In regional economic integration for the past four
contrast to prewar Europe’s negotiations, which years, after the Trump administration pulled
emphasized borders and political recognition, out of the Trans-Pacific Partnership (TPP) early
those in the Indo-Pacific will inevitably revolve in its term, RCEP is a publicity coup for Beijing.
around supply chains, standards, investment The signing of the RCEP indicates that it may
regimes, and trade agreements. Moreover, as be more difficult than previously thought for a
China provides infrastructure financing through Biden Administration to reverse course on four
the Belt and Road Initiative, the US should develop years of President Donald Trump’s “America
ways to provide alternative financing and technical First” withdrawal from multilateralism. “The trade
assistance. Negotiating Beijing’s role in this pact more closely ties the economic fortunes of
order is the most complex element of the overall the signatory countries to that of China and will
endeavor. Although Indo-Pacific states seek US over time pull these countries deeper into the
help to preserve their autonomy in the face of economic and political orbit of China,” says Eswar
China’s rise, they realize it is neither practical nor Prasad, a professor of economics and trade policy
profitable to exclude Beijing from Asia’s vibrant at Cornell University and the former head of the
future. Nor do the region’s states want to be International Monetary Fund’s China Division.
forced to “choose” between the two superpowers. Meanwhile, President Xi is also moving rapidly
A better solution would be for the US and its to gain greater self-sufficiency in developing key
partners to persuade China that there are benefits technologies, particularly semiconductors. It’s
to a competitive but peaceful region organized clear that he regards 2021, the centenary of the
around a few essential requirements: a place for Chinese Communist Party, as perhaps the most
Beijing in the regional order; Chinese membership important year since he came to power in 2013.
in the order ’s primary institutions; a predictable He regards the decade ahead as decisive (Kempe).
commercial environment if the country plays by
the rules; and opportunities to jointly benefit from Endgame
collaboration on climate, infrastructure, and the
COVID-19 pandemic. Marginal buy-in from China Biden and China’s Xi Jinping know their nations
has played a central role in the region’s success need to find a way to manage their rivalry over
thus far. It will remain important in the years the long-term. If the two leaders are to put the
ahead (Campbell and Doshi). relationship on a more even keel, though, they
don’t have much time. For different reasons, each
Meanwhile, China President Xi Jinping isn’t of them would surely welcome a pause in the
willing to hit the pause button to provide steady escalation of tensions that has marked
President Biden time and space to assemble the past few years. Biden faces a daunting list
his China team, reach out to allies, and frame of domestic priorities — containing a rampaging
his strategy. President Xi certainly won’t do pandemic, healing a polarized nation and reviving
so on trade and investment. Shortly after the economy. He also believes that to prevail in
the US election in November 2020, 15 Asian any strategic contest with China, the US must first
states, including China, signed the Regional rebuild its strength at home and forge a strong
Comprehensive Economic Partnership (RCEP). coalition of like-minded allies abroad, which will
The deal, midwifed by China and promoted for take time. Xi similarly views the US-China rivalry
years by Beijing, includes both close Chinese as a protracted struggle. And, since Chinese
partners like Cambodia as well as countries leaders think the balance of power will gradually
with cold relations with Beijing, like Australia favor China due to its strong economic growth
and Japan. Overall, RCEP will create the most potential, they ’d prefer to de -escalate conflict
populous trade area in the world, and it joins with the US for now, when China is in a weaker
together several of the largest economies in position. The way to maintain an equilibrium
the world, like China, Japan, and South Korea. in relations, both seem to agree, is to balance
It provides a major signal to investors that the competition and cooperation. Biden and his key
region is still committed to multilateral trade
168
members, even as China grows more sophisticated integration. In addition, with the US absent from
in its use of economic carrots and sticks. In regional economic integration for the past four
contrast to prewar Europe’s negotiations, which years, after the Trump administration pulled
emphasized borders and political recognition, out of the Trans-Pacific Partnership (TPP) early
those in the Indo-Pacific will inevitably revolve in its term, RCEP is a publicity coup for Beijing.
around supply chains, standards, investment The signing of the RCEP indicates that it may
regimes, and trade agreements. Moreover, as be more difficult than previously thought for a
China provides infrastructure financing through Biden Administration to reverse course on four
the Belt and Road Initiative, the US should develop years of President Donald Trump’s “America
ways to provide alternative financing and technical First” withdrawal from multilateralism. “The trade
assistance. Negotiating Beijing’s role in this pact more closely ties the economic fortunes of
order is the most complex element of the overall the signatory countries to that of China and will
endeavor. Although Indo-Pacific states seek US over time pull these countries deeper into the
help to preserve their autonomy in the face of economic and political orbit of China,” says Eswar
China’s rise, they realize it is neither practical nor Prasad, a professor of economics and trade policy
profitable to exclude Beijing from Asia’s vibrant at Cornell University and the former head of the
future. Nor do the region’s states want to be International Monetary Fund’s China Division.
forced to “choose” between the two superpowers. Meanwhile, President Xi is also moving rapidly
A better solution would be for the US and its to gain greater self-sufficiency in developing key
partners to persuade China that there are benefits technologies, particularly semiconductors. It’s
to a competitive but peaceful region organized clear that he regards 2021, the centenary of the
around a few essential requirements: a place for Chinese Communist Party, as perhaps the most
Beijing in the regional order; Chinese membership important year since he came to power in 2013.
in the order ’s primary institutions; a predictable He regards the decade ahead as decisive (Kempe).
commercial environment if the country plays by
the rules; and opportunities to jointly benefit from Endgame
collaboration on climate, infrastructure, and the
COVID-19 pandemic. Marginal buy-in from China Biden and China’s Xi Jinping know their nations
has played a central role in the region’s success need to find a way to manage their rivalry over
thus far. It will remain important in the years the long-term. If the two leaders are to put the
ahead (Campbell and Doshi). relationship on a more even keel, though, they
don’t have much time. For different reasons, each
Meanwhile, China President Xi Jinping isn’t of them would surely welcome a pause in the
willing to hit the pause button to provide steady escalation of tensions that has marked
President Biden time and space to assemble the past few years. Biden faces a daunting list
his China team, reach out to allies, and frame of domestic priorities — containing a rampaging
his strategy. President Xi certainly won’t do pandemic, healing a polarized nation and reviving
so on trade and investment. Shortly after the economy. He also believes that to prevail in
the US election in November 2020, 15 Asian any strategic contest with China, the US must first
states, including China, signed the Regional rebuild its strength at home and forge a strong
Comprehensive Economic Partnership (RCEP). coalition of like-minded allies abroad, which will
The deal, midwifed by China and promoted for take time. Xi similarly views the US-China rivalry
years by Beijing, includes both close Chinese as a protracted struggle. And, since Chinese
partners like Cambodia as well as countries leaders think the balance of power will gradually
with cold relations with Beijing, like Australia favor China due to its strong economic growth
and Japan. Overall, RCEP will create the most potential, they ’d prefer to de -escalate conflict
populous trade area in the world, and it joins with the US for now, when China is in a weaker
together several of the largest economies in position. The way to maintain an equilibrium
the world, like China, Japan, and South Korea. in relations, both seem to agree, is to balance
It provides a major signal to investors that the competition and cooperation. Biden and his key
region is still committed to multilateral trade
168
