The Washington PostDemocracy Dies in Darkness

In China’s words, it’s open for business. In actions, not so much.

Chinese Commerce Minister Wang Wentao, center right, and his Australian counterpart, Don Farrell, in Beijing this month. (Australia Dfat/Reuters)
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Chinese Commerce Minister Wang Wentao will arrive in Washington this week with a message for American companies: China is open for business and warmly welcomes American investment.

It was a message he delivered to American business leaders in Shanghai — including executives from 3M, Johnson & Johnson, Merck, Dow and Honeywell — on Monday, before his departure for Washington, where he is set to meet Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai, according to the Chinese Embassy in Washington.

But his trip — and his message — could hardly come at a more challenging time: Even as the two sides signal interest in rekindling diplomatic ties, relations remain at a low point, and a partisan Washington is united by animosity toward the Chinese Communist Party.

And American businesses are growing increasingly alarmed about a new Chinese espionage law that, in the words of the U.S. Chamber of Commerce, risks “undermining China’s stated policy of openness and desire to attract new foreign investment and exports” from the United States.

“A day doesn’t go by without some news about how the U.S. and China are constantly in a state of needling one another over the issue of the day,” said James Zimmerman, a partner in the Beijing office of Perkins Coie LLP and former chairman of the American Chamber of Commerce in China. “In the ever-changing current environment, businesses on the ground in China are constantly revising their strategic plans, tearing them up and starting over again.”

Foreign businesses in China have watched with alarm in recent weeks as authorities have ramped up scrutiny of foreign firms, conducted raids on due-diligence companies Mintz Group and Bain & Co., and investigated international consultancy Capvision citing national security reasons.

The raids coincided with a sweeping overhaul of the country’s espionage law, sparking concern among foreign executives that even ordinary business activities could now run afoul of the law.

Authorities have also cut off overseas access to key business and investment information, including databases of procurement documents, corporate registrations and patent information.

China raids another global business consultancy, cites spying concerns

Over the weekend, the Chinese cybersecurity regulator declared that U.S. chipmaker Micron had failed to pass a security review and barred Chinese firms from using Micron technology in “sensitive infrastructure” over unspecified “security risks.”

Following those actions, Wang’s insistence that China welcomes foreign businesses suggests a disconnect in Beijing, analysts say, as the government prioritizes national security while also trying to boost foreign investment and economic growth after three stifling years under “zero-covid” restrictions.

Trade between the United States and China fell more than 13 percent in the first quarter of this year compared with the same period last year, to $161.5 billion, according to Chinese customs data released this month.

While Wang’s meetings with Raimondo and Tai will be useful for restoring a baseline level of communication between the two countries, experts say that what China’s foreign business community and prospective investors will be looking out for is clarity.

A clear statement from Wang after the meeting that the red carpet really is being rolled out for foreign investors would provide evidence that, at the highest level, Beijing is on the side of business and economic growth, said Lester Ross, a Beijing-based lawyer and chair of the policy committee at the American Chamber of Commerce in China.

“If there is a contest between the security authorities and the commerce or business communities, communicating such a message after this meeting would send a powerful signal throughout China that the top leadership really means it when they say they are welcoming foreign investment,” Ross said.

In recent months, Wang has assured chief executives at American tech companies like Qualcomm and Intel that China’s development would be beneficial for their businesses.

China’s use of exit bans on the rise, worrying international businesses

Biden administration officials see recent talks as a sign that more liberal forces at the top of the Chinese Communist Party could be moderating the recent hard line. Earlier this month, U.S. national security adviser Jake Sullivan met with China’s top diplomat, Wang Yi, in Vienna, and U.S. Ambassador to China Nicholas Burns met with Commerce Minister Wang and Foreign Minister Qin Gang.

The talks could be a step toward a high-level U.S. official making a visit to China. Raimondo and Treasury Secretary Janet L. Yellen have both expressed interest in visiting China, and climate envoy John F. Kerry said this month that he had been invited to visit China in the “near term.”

There’s still room for cooperation with the United States despite its “Cold War mentality,” said He Weiwen, a former Chinese diplomat in the U.S. who now serves as a senior fellow at Renmin University of China.

“Economic and trade cooperation is still the ballast of Sino-U.S. relations,” He told the Global Times. “The Chinese and American governments and business communities need to meet each other halfway, actively stabilize and promote the recovery of bilateral economic and trade growth.”

China, ever so tentatively, signals willingness to talk to U.S. again

But it’s not just American companies that are feeling the strain. A recent survey by the British Chamber of Commerce found that 70 percent of responding businesses, a record high, preferred to adopt a wait-and-see approach to prospective China investments and felt it was too early to make long-term commitments.

After the recent detention of an employee of Japanese drugmaker Astellas Pharma, the Japanese government warned its nationals to be alert not to violate the expanded espionage law. On Monday, South Korea’s vice minister of trade, Jang Young-jin, told reporters the government would defer to South Korean chipmakers on whether to boost their sales in China after the restrictions placed on Micron.

Chinese city and local-level government officials have also expressed strong interest in attracting foreign investment after their debt levels ballooned during the zero-covid policy.

“Chinese private entrepreneurs are equally irritated about campaigns that curtail foreign business activities here,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China. The recent raids, coupled with the espionage law, had made European business leaders wary.

“The last thing we need now, with the uncertain economic environment, is to have an uncertain regulatory circumstances here,” Wuttke said.

David Lynch in Washington and Lyric Li in Seoul contributed to this report.