US Companies Find China Too Risky
Raimondo revealed that American companies have reported "exorbitant fines without any explanation, unclear revisions to the counterespionage law, and raids on businesses" as new challenges they face in China. This has prompted shockwaves in the U.S. business community and calls for these challenges to be addressed. She mentioned the lack of rationale behind actions against Micron Technology and rejected any comparison to U.S. export controls, citing limited due process.
Strengthening Communication Amidst Superpower Friction
The visit of the commerce secretary is part of the Biden administration's efforts to enhance communication, especially on economic and defense matters, amid growing concerns that tensions between the U.S. and China could escalate uncontrollably. Despite the challenges, Raimondo clarified that the U.S. does not intend to decouple from China, emphasizing the importance of not having "all our eggs in one basket."
Businesses Not Keen on China Expansion
John Ramig, an international business transactions expert, noted that businesses are no longer interested in expanding in China. Many are considering selling their Chinese operations or seeking alternative locations for sourcing products. This shift in business sentiment is a significant change from the situation just five years ago.
Power Struggle Affecting Companies
Companies have been entangled in the power struggle between the U.S. and China for years. Both countries have implemented measures that affect each other's businesses. For instance, the U.S. has invested billions in subsidies to boost American semiconductor production and implemented electric vehicle tax policies to encourage carmakers to move supply chains out of China. Meanwhile, China has restricted shipments from Micron, delayed approval for Intel Corp's acquisition, and fined Mintz Group for conducting "unapproved statistical work."
Shift in Trading Partners
The U.S. and China were once each other's largest trading partners, but now the U.S. trades more with Canada and Mexico, while China engages more with Southeast Asia. Raimondo attributed this shift to the recent unpredictable actions of China, which have led businesses to explore opportunities in other countries.
Lack of Commitment from China
The recent comments by Raimondo may trigger a negative reaction from Chinese officials. Last year, JP Morgan labeled Chinese internet companies as “uninvestible,” causing a sharp decline in their stock prices, although it later said the term was used in error. Raimondo mentioned that she did not receive any commitments from China regarding Boeing, Intel, or Micron during her visit, despite expressing firm expectations.