Page 52 - 2022 White Paper on the Business Environment in China
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2 White Paper on the Business Environment in China
Stream Gas pipeline to Europe, and the banning The questions to ask therefore are whether the
of China’s Huawei 5G equipment. These to some United States, or China will blink first. That can
degree, have been localized, if heavily damaging happen in two ways, either by a toning down
methods of trying to obtain the upper hand while of the rhetoric and the putting forward of an
publicly being seen to be playing by the rules, alternative path in which the United States can
or at very least instructing media that this is the cooperate or negotiate with China on matters of
case while offering ulterior motives for pursuing mutual interest or to use a negotiable strategy
such actions. Given that the United States federal in which concessions are made by one party to
budget spend on IT in 2021 is an estimated obtain key favors from the other. If not, given
US$92 billion, one would wonder why Russia tech that China and Russia’s IT spend combined are
appears superior and able to defeat US defenses nearly five times that of the US – hi-tech savviness
so often. China though is a different story – and development will shift to Asia, and not the
currently the global behemoth in IT budgets – an West, and the very scenario that Presidents Putin
estimated US$378 billion was allocated in 2020. and Xi warn about will occur. The US Strategic
If so, then the United States is in danger of losing Competition Act has the potential to be the
out in the global battle for tech supremacy. As trigger to push that reality forward, meaning
Vladimir Putin pointed out at the St. Petersburg an alternative US strategy urgently needs to be
International Economic Forum (SPIEF) conference found. US President Biden has also proposed
in 2019, whoever gets to AI supremacy first, an additional US$1.8 trillion plan “to support
rules the world. The Strategic Competition Act families”, while also arguing the spending plans
therefore can be seen as an attempt to plug are necessary “to keep up with China”. It appears
that gap until the US can play catch-up. Within the US is now throwing everything into play to
it are other measures that connect business ensure their economy remains ahead of China’s.
with political issues. However, the entire tone There are problems with this strategy – the
of the legislation is extremely combative and current economic and trade scenario seems to
not something which would be conducive to be headed for an economic growth showdown
improving bilateral relations. In fact, it may be which could break the global economy if growth
described as the beginning of the end of cordial takes off, inflation kicks in and monetary policy
relations between China and the US – and becomes suddenly restrictive – possibly severely
usher in that very same Global Decoupling that restrictive – leading, in turn to a potential
Presidents Putin and Xi warn about. Examples of financial crisis given vast current private and
the bills combative language are phrases such as public debt levels (Devonshire-Ellis).
“It is the policy of the United States, in pursuing
strategic competition with the PRC, …to expose In November 2021, after months of discord and
the PRC’s use of corruption, repression, coercion, delay, the House began moving ahead on Senate
and other malign behavior to attain unfair Majority Leader Chuck Schumer’s China-targeted
economic advantage and deference of other US$250 billion US Innovation and Competition Act.
nations to its political and strategic objectives.” But Beijing didn’t take this lying down. Its officials
The text also asserts that “The PRC is promoting have warned that reprisals are coming, should
its governance model and attempting to weaken the bill become law, and experts caution that the
other models of governance by undermining effect could be severe on key US economic sectors.
democratic institutions; subverting financial Schumer and House Speaker Nancy Pelosi earlier
institutions; coercing businesses to accommodate this month began to remove hurdles to USICA’s
the policies of the PRC; and using disinformation consideration, hoping to advance it through the
to disguise the nature of its actions.” To be House and put it on President Joe Biden’s desk “as
accused of such behavior in a bill – without any soon as possible.” The bill passed the Senate with
right to reply – did not sit well with Beijing. It bipartisan support in June.
may also signal to China that the US diplomatic
process is not working. The bill assumes that Beijing has promised retaliation if the bill
the Chinese Communist Party represents a makes it through Congress but has not given
repressive regime that is not open to negotiation. specifics. China experts say those reprisals
52
Stream Gas pipeline to Europe, and the banning The questions to ask therefore are whether the
of China’s Huawei 5G equipment. These to some United States, or China will blink first. That can
degree, have been localized, if heavily damaging happen in two ways, either by a toning down
methods of trying to obtain the upper hand while of the rhetoric and the putting forward of an
publicly being seen to be playing by the rules, alternative path in which the United States can
or at very least instructing media that this is the cooperate or negotiate with China on matters of
case while offering ulterior motives for pursuing mutual interest or to use a negotiable strategy
such actions. Given that the United States federal in which concessions are made by one party to
budget spend on IT in 2021 is an estimated obtain key favors from the other. If not, given
US$92 billion, one would wonder why Russia tech that China and Russia’s IT spend combined are
appears superior and able to defeat US defenses nearly five times that of the US – hi-tech savviness
so often. China though is a different story – and development will shift to Asia, and not the
currently the global behemoth in IT budgets – an West, and the very scenario that Presidents Putin
estimated US$378 billion was allocated in 2020. and Xi warn about will occur. The US Strategic
If so, then the United States is in danger of losing Competition Act has the potential to be the
out in the global battle for tech supremacy. As trigger to push that reality forward, meaning
Vladimir Putin pointed out at the St. Petersburg an alternative US strategy urgently needs to be
International Economic Forum (SPIEF) conference found. US President Biden has also proposed
in 2019, whoever gets to AI supremacy first, an additional US$1.8 trillion plan “to support
rules the world. The Strategic Competition Act families”, while also arguing the spending plans
therefore can be seen as an attempt to plug are necessary “to keep up with China”. It appears
that gap until the US can play catch-up. Within the US is now throwing everything into play to
it are other measures that connect business ensure their economy remains ahead of China’s.
with political issues. However, the entire tone There are problems with this strategy – the
of the legislation is extremely combative and current economic and trade scenario seems to
not something which would be conducive to be headed for an economic growth showdown
improving bilateral relations. In fact, it may be which could break the global economy if growth
described as the beginning of the end of cordial takes off, inflation kicks in and monetary policy
relations between China and the US – and becomes suddenly restrictive – possibly severely
usher in that very same Global Decoupling that restrictive – leading, in turn to a potential
Presidents Putin and Xi warn about. Examples of financial crisis given vast current private and
the bills combative language are phrases such as public debt levels (Devonshire-Ellis).
“It is the policy of the United States, in pursuing
strategic competition with the PRC, …to expose In November 2021, after months of discord and
the PRC’s use of corruption, repression, coercion, delay, the House began moving ahead on Senate
and other malign behavior to attain unfair Majority Leader Chuck Schumer’s China-targeted
economic advantage and deference of other US$250 billion US Innovation and Competition Act.
nations to its political and strategic objectives.” But Beijing didn’t take this lying down. Its officials
The text also asserts that “The PRC is promoting have warned that reprisals are coming, should
its governance model and attempting to weaken the bill become law, and experts caution that the
other models of governance by undermining effect could be severe on key US economic sectors.
democratic institutions; subverting financial Schumer and House Speaker Nancy Pelosi earlier
institutions; coercing businesses to accommodate this month began to remove hurdles to USICA’s
the policies of the PRC; and using disinformation consideration, hoping to advance it through the
to disguise the nature of its actions.” To be House and put it on President Joe Biden’s desk “as
accused of such behavior in a bill – without any soon as possible.” The bill passed the Senate with
right to reply – did not sit well with Beijing. It bipartisan support in June.
may also signal to China that the US diplomatic
process is not working. The bill assumes that Beijing has promised retaliation if the bill
the Chinese Communist Party represents a makes it through Congress but has not given
repressive regime that is not open to negotiation. specifics. China experts say those reprisals
52
