Page 54 - 2022 White Paper on the Business Environment in China
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2 White Paper on the Business Environment in China
may include deliberate disruptions in imported such as the automotive sector. Such intentional
parts’ supplies for US manufacturers and curbs disruption of targeted supply chains will allow
on Chinese purchases of US exports. With Beijing to retaliate with a degree of plausible
supply chains already strained to the breaking deniability while avoiding the blunter weapon
point, Beijing’s response could test Biden and of an escalating series of tit-for-tat tariffs. China
Chinese leader Xi Jinping’s resolve to create a does not have many ways to hurt the US now
less rancorous US-China relationship. USICA without damage to itself, but reducing the flow
integrates multiple China targeted bills — the of strategic inputs for electrical vehicles would
Strategic Competition Act of 2021 the Endless be a possible avenue for retaliation. China could
Frontier Act and Meeting the China Challenge use those supply chains to try to inflict pain, and
Act among them — into one massive 2,276- because the Chinese leadership sees the West
page piece of legislation. It’s designed to as moving to reduce their dependence on China,
preserve a competitive technological edge over adding uncertainty about Chinese supply won’t
China through the injection of tens of billions be overly costly for China because the US policy
of taxpayer dollars for various initiatives, direction is mostly set. Such retaliation should
including US semiconductor manufacturing come as no surprise. The Chinese government
and “buy American'' requirements for federally has bristled at USICA since it passed the Senate
funded infrastructure projects. The US wanted in June. The foreign affairs committee of China’s
to be clear publicly and privately with China’s National People’s Congress slammed USICA
government that it intends to strengthen on June 9 as an attempt to “contain China’s
its own competitive hand. But USICA also development under the banner of ‘innovation
includes multiple provisions that specifically and competition.’” The House has yet to pass the
address [perceived] Chinese threats to the US anchor of its legislative package — the Ensuring
economy, including state-directed intellectual American Global Leadership and Engagement Act
property theft, forced technology transfers — and Pelosi has given no indication when that
and malicious cyberattacks on US government may happen. Despite the recent virtual meeting
and corporate entities. The bill’s reach extends between Biden and Xi to stabilize the relationship,
to a ban on government agency purchases the trend lines are pointing toward a frosty
of Chinese manufactured drones as well as winter. The political headwinds in the United
prohibiting the use of government hardware States are blowing in a hawkish direction, which
to download TikTok, the Chinese video social means that both the administration and Congress
network platform. US-based business groupings are going to continue to push for tough policies
view Chinese retaliation as unavoidable and on China, especially as the country heads into the
are bracing for it with a mixture of dread and 2022 election year. How the United States and
resignation. Retaliation is likely to be subtler than China plan to manage their relationship moving
an imposition of fresh tariffs, given the recent forward without it totally falling off a cliff is an
efforts of US Trade Representative Katherine Tai open question and one that a lot of people are
and her Chinese counterpart, Vice Premier Liu concerned about (Kine and Bade).
He, to untangle the US-China trade relationship.
Tai has announced the US will reopen a process The Phone Call
to allow US firms to seek exemptions from tariffs
on certain Chinese imports and will restart On September 10, Chinese President Xi Jinping
talks with China on its failure to comply with and US President Joe Biden had a lengthy and
conditions of the Phase One US-China trade deal constructive phone conversation, bringing new
implemented on February 14, 2020. “Another hope for stabilizing the bilateral relations. Top-
round of tariff wars” is unlikely, said Kelly Ann level engagement between Washington and
Shaw, a former senior trade adviser to President Beijing is essential for the world's two largest
Donald Trump. “Trade talks are occurring in a economies to resolve the impasse over bilateral
separate lane.” Instead, the Chinese government relations. During the conversation, Xi told Biden
is likely to signal its anger by tapping the brakes that "for some time, due to the US policy on
on select exports essential to key US industries,
54
may include deliberate disruptions in imported such as the automotive sector. Such intentional
parts’ supplies for US manufacturers and curbs disruption of targeted supply chains will allow
on Chinese purchases of US exports. With Beijing to retaliate with a degree of plausible
supply chains already strained to the breaking deniability while avoiding the blunter weapon
point, Beijing’s response could test Biden and of an escalating series of tit-for-tat tariffs. China
Chinese leader Xi Jinping’s resolve to create a does not have many ways to hurt the US now
less rancorous US-China relationship. USICA without damage to itself, but reducing the flow
integrates multiple China targeted bills — the of strategic inputs for electrical vehicles would
Strategic Competition Act of 2021 the Endless be a possible avenue for retaliation. China could
Frontier Act and Meeting the China Challenge use those supply chains to try to inflict pain, and
Act among them — into one massive 2,276- because the Chinese leadership sees the West
page piece of legislation. It’s designed to as moving to reduce their dependence on China,
preserve a competitive technological edge over adding uncertainty about Chinese supply won’t
China through the injection of tens of billions be overly costly for China because the US policy
of taxpayer dollars for various initiatives, direction is mostly set. Such retaliation should
including US semiconductor manufacturing come as no surprise. The Chinese government
and “buy American'' requirements for federally has bristled at USICA since it passed the Senate
funded infrastructure projects. The US wanted in June. The foreign affairs committee of China’s
to be clear publicly and privately with China’s National People’s Congress slammed USICA
government that it intends to strengthen on June 9 as an attempt to “contain China’s
its own competitive hand. But USICA also development under the banner of ‘innovation
includes multiple provisions that specifically and competition.’” The House has yet to pass the
address [perceived] Chinese threats to the US anchor of its legislative package — the Ensuring
economy, including state-directed intellectual American Global Leadership and Engagement Act
property theft, forced technology transfers — and Pelosi has given no indication when that
and malicious cyberattacks on US government may happen. Despite the recent virtual meeting
and corporate entities. The bill’s reach extends between Biden and Xi to stabilize the relationship,
to a ban on government agency purchases the trend lines are pointing toward a frosty
of Chinese manufactured drones as well as winter. The political headwinds in the United
prohibiting the use of government hardware States are blowing in a hawkish direction, which
to download TikTok, the Chinese video social means that both the administration and Congress
network platform. US-based business groupings are going to continue to push for tough policies
view Chinese retaliation as unavoidable and on China, especially as the country heads into the
are bracing for it with a mixture of dread and 2022 election year. How the United States and
resignation. Retaliation is likely to be subtler than China plan to manage their relationship moving
an imposition of fresh tariffs, given the recent forward without it totally falling off a cliff is an
efforts of US Trade Representative Katherine Tai open question and one that a lot of people are
and her Chinese counterpart, Vice Premier Liu concerned about (Kine and Bade).
He, to untangle the US-China trade relationship.
Tai has announced the US will reopen a process The Phone Call
to allow US firms to seek exemptions from tariffs
on certain Chinese imports and will restart On September 10, Chinese President Xi Jinping
talks with China on its failure to comply with and US President Joe Biden had a lengthy and
conditions of the Phase One US-China trade deal constructive phone conversation, bringing new
implemented on February 14, 2020. “Another hope for stabilizing the bilateral relations. Top-
round of tariff wars” is unlikely, said Kelly Ann level engagement between Washington and
Shaw, a former senior trade adviser to President Beijing is essential for the world's two largest
Donald Trump. “Trade talks are occurring in a economies to resolve the impasse over bilateral
separate lane.” Instead, the Chinese government relations. During the conversation, Xi told Biden
is likely to signal its anger by tapping the brakes that "for some time, due to the US policy on
on select exports essential to key US industries,
54
