Tensions between the United States and China continue to cause uncertainty and risk for U.S. companies, according to one business organization.
That’s among the conclusions of a 2021 member survey conducted by the U.S.-China Business Council. It also revealed its members believe Chinese government policies have given China's companies an unfair advantage over U.S. competitors, even as American companies continue to invest and rely on China’s market.
All this has left American companies feeling pessimistic about their ability to compete in China, according to Douglas Barry, vice president of communications and publications for the U.S.-China Business Council.
“The overall relationship is fraught, with low levels of trust," Barry told Globe Banner. "Trade continues despite punitive tariffs. U.S. goods exports to China were up 20% in 2021, but this increase was mostly the result of the Phase One trade agreement which has now lapsed with China buying only about 60% of what was promised. The states that produce agricultural goods have seen sales increase by 40%.”
Barry said the annual survey indicates that 90% of members generate good profits and many of them plan to invest more in the market, while others have paused over concerns about the future of bilateral relations. The survey was conducted in June and included 107 member companies.
“National security is now the lens both governments use to view the relationship,” he said. “Market access, creating a level playing field, and removing trade barriers have faded from this view. A plethora of legislation on the U.S. side, dual circulation on the China side and appeals to nationalist impulses by both sides are driving decoupling, at least in important high-tech areas where products can be used for military purposes.
“As centrifugal forces intensify, leaders in both countries are slow to appreciate how intertwined our economies have become," Barry said. "In the case of the U.S., one million jobs depend on exports. Every state has gained from trade. The trade war has cost Americans billions of dollars in tariffs paid not to China but to the U.S. Treasury. Some economists say these tariffs contribute to inflation.”
He said the council’s advice to members is to stay the course and to tell their story about how being in China for China consumers supports U.S. jobs, helps these companies compete globally and showcases American values. There also are positive areas to reflect upon.
“There have been no armed conflicts since diplomatic relations began 50 years ago," Barry said. "In part, peace is a dividend created by the commercial relationship. We encourage both governments to return to the negotiating table as soon as possible and with a sense of urgency that reflects the global role these superpowers can and must play in solving the existential challenges facing all of us.”
Still, it is a difficult time even as the world focuses on other events in China.
“This week we celebrate and squabble over the Winter Olympics,” Barry said. “It’s not crazy to ask, will there be another?”
The U.S.-China Business Council is a private, nonpartisan, nonprofit organization of more than 260 U.S. companies that do business with China. According to its website, the council's mission is to expand the U.S.-China commercial relationship to the benefit of its membership and, more broadly, the U.S. economy. It provides members with information, advisory, advocacy and program services as it relates to China.
Craig Allen has served as president of the U.S.-China Business Council since July 2018.
Before Barry joined the council, he worked in the private sector as a strategic communications consultant. Previously he was director of marketing, communications and strategic partnerships at the U.S. Foreign and Commercial Service.
Earlier in his career, he worked as a journalist for ABC News in New York and London. He has written several books and numerous articles on international trade for businesspeople.