The relationship between China and the United States has been marked by tensions and uncertainties, particularly when it comes to business and trade. However, Chinese Commerce Minister Wang Wentao recently highlighted the efforts being made to create a more stable and predictable environment for businesses in both countries. Through regular meetings and communication at various levels, China and the U.S. aim to improve economic and trade cooperation while addressing the challenges faced by foreign businesses operating in China.

During a press conference, Minister Wang emphasized the significance of stabilizing business expectations for the success of economic and trade cooperation between China and the U.S. He acknowledged that sanctions and tech restrictions imposed by the U.S. can bring about business uncertainty and increase compliance costs. However, Wang strongly believes that the common interests shared by both nations in the field of economy and trade outweigh their differences. This statement reflects the underlying objective of fostering a more favorable business environment.

Challenges Faced by Foreign Businesses in China

Foreign businesses, including those from the U.S., have long aired their grievances regarding the challenges associated with operating in China. Unequal treatment compared to local companies and vague rules related to data transfer have hindered smooth operations for international businesses. To address these concerns, the Cyberspace Administration of China (CAC) released draft rules that exempt data exports from government oversight if not deemed “important.” Although this move was seen as a positive development, there is still a need for official policy clarification. Minister Wang indicated that efforts are underway to release updated rules and emphasized that the Chinese government has already implemented or made progress on over 60% of the measures outlined in the 24-point plan released last summer to support foreign businesses.

The Need for Predictability

Recognizing the importance of predictability for U.S. businesses, U.S. Commerce Secretary Gina Raimondo called for more action during her visit to China. She specifically highlighted the 24-point plan as a means to demonstrate concrete progress. The intention to improve predictability amidst uncertainties echoes the mutual desire for stability and predictability in the China-U.S. business relationship.

Economic Outlook and Foreign Investment

China’s economic growth has experienced a shift from double-digit figures to a more moderate pace, with a 5.2% increase in 2023. It is projected to slow further in the coming years. Minister Wang cautioned that the international trade situation in the current year would become “even more complex and severe,” citing increased geopolitical tensions as contributing factors. Foreign direct investment in China saw an 8% decline to 1.13 trillion yuan ($160 billion) in 2023, marking the lowest level in three years. The Ministry of Commerce did not provide specific data on U.S. investments but highlighted the significant increases in investments from France and the U.K. China aims to attract more foreign investment and has been actively promoting its opportunities at global events.

At the World Economic Forum in Davos, Chinese Premier Li Qiang presented China as an opportunity rather than a risk. CEOs from various sectors shared positive experiences of increased access and favorable business terms, licenses, and partnerships. Ian Bremmer, founder and president of the Eurasia Group, highlighted the stories of CEOs who expressed enthusiasm about their business prospects in China. Many Fortune 500 CEOs indicated their plans to visit China more frequently in the upcoming year compared to the previous year.

While challenges persist, both China and the U.S. are taking steps to enhance stability and predictability for businesses. Regular communication, meetings at different levels, and the implementation of supportive measures reflect the commitment of these two nations to strengthen their economic and trade cooperation. As uncertainties prevail, it is crucial to continue striving for a more favorable environment that fosters mutual interests and sustains long-term collaboration.

Finance

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