U.S.-China relations 'stable but fragile,' AmCham chief says
American businesses want action, not promises, from Chinese regulators
HONG KONG -- U.S.-China relations are "stable but fragile," the American Chamber of Commerce in China said Tuesday, as it released its annual white paper on business conditions in the world's No. 2 economy.
"By stable, what I mean is the relationship isn't continuing to deteriorate with tit-for-tat types of actions," AmCham China Chair Sean Stein said during a conference call.
But while AmCham and its members welcomed a resurgence in high-level communication between the governments -- calling for it to continue -- the message was that the ties remain in a delicate state, often shrouded in uncertainty.
This week, U.S. Secretary of State Antony Blinken is due in China, closely following a visit by Treasury Secretary Janet Yellen. She delivered a stern warning against support for Russia's war in Ukraine and underscored concerns over what many in the West see as Chinese industrial overcapacity.
The two countries' leaders, presidents Joe Biden and Xi Jinping, also spoke by phone at the beginning of April, checking in after their face-to-face meeting in California last November.
Stein described Yellen's trip as "enormously positive" because it helped ensure Chinese policymakers at the highest level understand U.S. concerns. "Irrespective of whether or not China adjusts its policy, it sort of put down a marker that the U.S. reserves the right to ... respond, which again, helps bring some predictability and stability to the relationship."
Stein said Blinken's upcoming visit is encouraging, too, because it shows the two sides will keep talking even on some "very difficult issues where there are significant disagreements."
Nevertheless, bilateral tensions remained the top concern for U.S. businesses operating in China, according to AmCham's white paper.
Stein noted that member companies have been facing mounting pressure from both governments. "What we've seen is it's not getting easier to do business in China. It's getting harder," he said. "It's not getting simpler. It's becoming more complex."
On the Chinese side, the white paper says that "the inconsistency in policy over time and the discrepancy between stated policies and their implementation has led to a cautious approach among investors. Foreign investors are finding that the anticipated economic reforms and efforts to liberalize are unfolding at a slow pace, which has tempered enthusiasm and confidence over the prospects of the Chinese market for foreign investment."
The latest data on China's inbound foreign direct investment shows a 26.1% year-on-year decline for the January-March quarter, despite Beijing's efforts to woo global companies.
"The era when American companies or foreign companies can invest in China and get returns greater than they receive in other markets [is] disappearing," said Stein. On the other hand, he noted that the cost of doing business in China is going up, including compliance costs, which has contributed to lower investment.
Stein recommended that China should follow through and implement the 24 reform measures it announced last August if it wants to build confidence and attract foreign investment. The measures covered topics such as ensuring equal treatment of foreign and domestic companies, and exploring a convenient and secure management mechanism for cross-border data flows.
"We're at a stage now where promises of policies don't move markets so they don't lead to investment," he said. "Action leads to investment. It's the actions that boardrooms across the globe want to see."