The latest Chinese Communist Party congress kicked off in Beijing on Sunday with a widely publicized speech by leader Xi Jinping on issues ranging from Marx to Covid-19. How have US companies assessed the gathering of the politically powerful so far?
Sean Stein, chairman of the American Chamber of Commerce in Shanghai, says business leaders seeking an end to the country’s strict zero-Covid policy have likely been disappointed so far. But the reaffirmation of the overall direction of the past few years has been welcomed, Stein said in a Zoom interview from Shanghai today. Stein is also a senior advisor at global law firm Covington. Before joining Covington last year, Stein was the US Consul General in Shanghai. Edited interview excerpts follow.
Flannery: How has the foreign economy rated the party congress so far?
Stein: The China-based business community understands that this is an important part of the Chinese political calendar and has modest expectations of what this might mean for them.
The most important thing companies and investors have been looking for is a sign that zero-Covid might be eased, or that there might be a swing away from it. Very few people expected it, but there was hope that President Xi’s speech could send a signal. Based on what we’ve seen so far, it looks like there will be zero Covid for the foreseeable future.
The second thing companies were looking for was a sign of the direction of Chinese economic policy. Once again, the business community got what it expected – continuity on the economic policy front with China. There was no sign of any major change in China’s economic policy or policy towards foreign trade.
I think that’s why the response was so muted. Although disappointing with zero Covid, everything went as expected.
Flannery: What do people think about the new technology industry policies on the US side, like the CHIPS Act and new restrictions on semiconductor shipments?
Stein: The new restrictions on semiconductors are interesting because the United States has traditionally focused export controls on a small subset of issues, such as global non-proliferation to limit exports of dual-use technologies, or as in the case of Huawei , (Restrictions) were used to penalize companies deemed violators of US law, bad corporate actors, or violators of export controls. For example, the list of entities has traditionally focused on these issues.
What we see in the new regulations is the Biden administration’s competitive approach that is coming into focus. The new rules not only restrict China’s ability to buy high-performance computer chips and AI chips, but also limit its ability to buy the equipment and software, and even prevent American citizens from working where those technologies go designed or manufactured in mainland China .
People are realizing that this is truly a new phase in the US-China competition because it is more about economic security, technological leadership and technological competition than the traditional focus of export controls, national security, non-proliferation and law enforcement was.
Flannery: What are the chances of a positive outcome of the APEC summit in November for US-China relations?
Stein: The companies are watching very closely and very much hoping that there will be a meeting (between Joe Biden and Xi Jinping). If there is no meeting between the two presidents, it’s really a missed opportunity for the two countries to find out if there’s something the two can work together on or a way to stabilize the relationship. There are many hopes that it will happen.
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