Page 50 - 2022 White Paper on the Business Environment in China
P. 50
2 White Paper on the Business Environment in China
wrong. I believe that this legislation will enable the government approach, using political, economic,
United States to out-innovate, out-produce, and and military tools, as well as propaganda, to
out-compete the world in the industries of the advance its influence and benefit its interests
future.” The bill would also fund a grant program in the United States.” The act specifies that it
managed by the Commerce Department that does not promote military solutions to China-
would match financial incentives offered by states US conflicts, but it does promote US cooperation
and local governments to chipmakers who improve with allies as well as reinforcement of US
upon or build new factories. Specifically, the bill capabilities to counter China. The act does not,
provides US$52 billion to fund the semiconductor however, lay out a trajectory in which the United
research, design, and manufacturing initiatives. States can cooperate or negotiate with China on
The Semiconductor Industry Association, a trade some issues, or use a tit-for-tat strategy in which
group that represents a swath of the nation’s concessions are made by one party to obtain key
chipmakers, was quick to applaud the Senate’s favors from the other. The latter is a preferred
effort. Reflecting the vote count, praise following method of mediation by the Chinese but requires
the bill’s passage through the Senate came from deep knowledge of the other party’s interests and
both sides of the political aisle. Sen. Ben Sasse, a willingness to give up some bargaining chips at
R-Neb., specifically cheered the legislation’s clear the negotiating table (Hsu).
goals and added that he would have preferred
an even more pointed bill. The bill’s success in The legislation was greeted with anger in
the Senate also comes as the White House ramps Beijing. "It distorts facts and confuses right and
up its own recommendations on how to secure wrong," said Wang Wenbin, a spokesman at
American supply chains that run through China. the Chinese foreign ministry. "It hypes up the
President Joe Biden applauded the bill’s passage, China threat theory and talks about full strategic
saying he was encouraged by the bipartisan effort. competition with China. It grossly interferes with
“It is long past time that we invest in American China's affairs and reeks of Cold War and zero-
workers and American innovation,” Biden said in a sum mentalities" (Zengerle and Martina).
statement. “We are in a competition to win the 21st
century, and the starting gun has gone off. As other Some of the business measures of the Act
countries continue to invest in their own research include publication of a list identifying Chinese
and development, we cannot risk falling behind.” owned firms benefiting from involuntary or
The White House also announced in April 2021 that coerced tech transfers of IP from a company
it will expand restrictions on American investments established in the US. The bill also proposes
in certain Chinese companies with alleged ties a list of subsidies to companies favored by
to the country’s military and surveillance efforts, China’s government or protected from overseas
adding more firms to a growing US blacklist. competition, and state enterprises benefiting
Also, the White House said that it will look into from financial support by China’s government,
dramatically expanding US production of lithium and which give advantage to them over foreign
batteries, rare earth minerals and semiconductors. competitors. This latter point has been a bone
The USICA affirmed a willingness to maintain of contention between China and the United
a sustained focus on the US-China strategic States, with Washington long arguing that China
competition through a bipartisan and whole-of- subsidizes its SOEs in manners inconsistent
government approach, leading into the upcoming with WTO agreements. China in fact changed
G7 and NATO summits where it is anticipated the its laws to prevent audited accounts of Chinese
US will be looking to work with allies to present a enterprises being admitted to subsidiaries
united front towards China (Franck). external from China in moves to specifically
introduce a lack of transparency to other nations
The overall thrust of the Strategic Competition auditors, and criminalized any attempt to do so,
Act of 2021 is that China is an adversary that suggesting there were indeed WTO breaches to
cannot be negotiated with. The report cites hide. However, in still more assertive measures,
then-Vice President Mike Pence’s statement the United States has been using trade sanctions
in 2018 that “Beijing is employing a whole-of- to punish competition – such as Russia’s Nord
50
wrong. I believe that this legislation will enable the government approach, using political, economic,
United States to out-innovate, out-produce, and and military tools, as well as propaganda, to
out-compete the world in the industries of the advance its influence and benefit its interests
future.” The bill would also fund a grant program in the United States.” The act specifies that it
managed by the Commerce Department that does not promote military solutions to China-
would match financial incentives offered by states US conflicts, but it does promote US cooperation
and local governments to chipmakers who improve with allies as well as reinforcement of US
upon or build new factories. Specifically, the bill capabilities to counter China. The act does not,
provides US$52 billion to fund the semiconductor however, lay out a trajectory in which the United
research, design, and manufacturing initiatives. States can cooperate or negotiate with China on
The Semiconductor Industry Association, a trade some issues, or use a tit-for-tat strategy in which
group that represents a swath of the nation’s concessions are made by one party to obtain key
chipmakers, was quick to applaud the Senate’s favors from the other. The latter is a preferred
effort. Reflecting the vote count, praise following method of mediation by the Chinese but requires
the bill’s passage through the Senate came from deep knowledge of the other party’s interests and
both sides of the political aisle. Sen. Ben Sasse, a willingness to give up some bargaining chips at
R-Neb., specifically cheered the legislation’s clear the negotiating table (Hsu).
goals and added that he would have preferred
an even more pointed bill. The bill’s success in The legislation was greeted with anger in
the Senate also comes as the White House ramps Beijing. "It distorts facts and confuses right and
up its own recommendations on how to secure wrong," said Wang Wenbin, a spokesman at
American supply chains that run through China. the Chinese foreign ministry. "It hypes up the
President Joe Biden applauded the bill’s passage, China threat theory and talks about full strategic
saying he was encouraged by the bipartisan effort. competition with China. It grossly interferes with
“It is long past time that we invest in American China's affairs and reeks of Cold War and zero-
workers and American innovation,” Biden said in a sum mentalities" (Zengerle and Martina).
statement. “We are in a competition to win the 21st
century, and the starting gun has gone off. As other Some of the business measures of the Act
countries continue to invest in their own research include publication of a list identifying Chinese
and development, we cannot risk falling behind.” owned firms benefiting from involuntary or
The White House also announced in April 2021 that coerced tech transfers of IP from a company
it will expand restrictions on American investments established in the US. The bill also proposes
in certain Chinese companies with alleged ties a list of subsidies to companies favored by
to the country’s military and surveillance efforts, China’s government or protected from overseas
adding more firms to a growing US blacklist. competition, and state enterprises benefiting
Also, the White House said that it will look into from financial support by China’s government,
dramatically expanding US production of lithium and which give advantage to them over foreign
batteries, rare earth minerals and semiconductors. competitors. This latter point has been a bone
The USICA affirmed a willingness to maintain of contention between China and the United
a sustained focus on the US-China strategic States, with Washington long arguing that China
competition through a bipartisan and whole-of- subsidizes its SOEs in manners inconsistent
government approach, leading into the upcoming with WTO agreements. China in fact changed
G7 and NATO summits where it is anticipated the its laws to prevent audited accounts of Chinese
US will be looking to work with allies to present a enterprises being admitted to subsidiaries
united front towards China (Franck). external from China in moves to specifically
introduce a lack of transparency to other nations
The overall thrust of the Strategic Competition auditors, and criminalized any attempt to do so,
Act of 2021 is that China is an adversary that suggesting there were indeed WTO breaches to
cannot be negotiated with. The report cites hide. However, in still more assertive measures,
then-Vice President Mike Pence’s statement the United States has been using trade sanctions
in 2018 that “Beijing is employing a whole-of- to punish competition – such as Russia’s Nord
50
