US Commerce Secretary Raimondo says stable relationship with China is ‘profoundly important’

By Michelle Toh, CNN

Hong Kong (CNN) — US Commerce Secretary Gina Raimondo said stable relations between Washington and Beijing are “profoundly important” as she kicked off a Monday meeting with her counterpart, Chinese Commerce Minister Wang Wentao.

Raimondo’s trip to Beijing and Shanghai, which ends on Wednesday, follows recent visits from three other key Biden administration officials, including Secretary of State Antony Blinken, Treasury Secretary Janet Yellen and Climate Envoy John Kerry.

“The economic relationship between the United States and China is one of the most significant in the world. We share over $700 billion of trade,” Raimondo said in the Chinese capital.

“It is profoundly important that we have a stable economic relationship, which is to the benefit of both of our countries. And in fact what the world expects of us. It’s a complicated relationship. It’s a challenging relationship. We will of course disagree on certain issues, but I believe that we can make progress if we are direct, open and practical.”

Wang said Beijing was also ready to work with Washington, adding that bilateral economic relations were important not just to the two countries, but to the rest of the world.

“I’m ready to work with you together to foster a more favorable policy environment, for stronger cooperation between our businesses to bolster bilateral trade and investment in a stable and predictable manner,” he told Raimondo.

Both officials expressed optimism, with Raimondo noting their teams had worked together over the summer to set up “new information exchanges and working groups” that would pave the way for more engagement between both sides.

Raimondo added she would not compromise or negotiate on any matters related to national security. But the vast majority of US-China trade was not related to national security, she said.

Wang agreed, saying he saw most trade between the two economies as “benign.”

Issues on the table

Raimondo will be discussing US-China commercial ties, challenges faced by US businesses and areas for potential cooperation, according to a statement issued by the US Commerce Department ahead of her trip.

Experts believe Beijing will use the opportunity to lobby for the lifting of US export controls and other restrictions, which have become a sticking point for policymakers.

Last October, the US government banned Chinese companies from buying advanced US chips and chipmaking equipment without a license. Washington has since convinced other countries, such as the Netherlands and Japan, to take similar action.

China has strongly objected to the curbs in recent months, accusing the US of politicizing business issues.

Washington extended an apparent olive branch to Beijing last week, with the Commerce Department announcing it had removed export controls for 27 Chinese companies, just days before Raimondo’s visit. The agency said those firms had undergone successful checks by authorities to ensure their products were being used legitimately.

China’s Ministry of Commerce responded warmly to the move, calling it “conducive to the normal trade between Chinese and American companies.”

“It is entirely possible to find a solution that benefits companies on both sides,” the ministry said in a statement last week.

However, several hot-button issues continue to weigh on both sides.

Raimondo said Monday the US had taken steps to reduce risk in its supply chain and improve the country’s infrastructure.

The move is key to President Joe Biden’s economic strategy and “is not intended to hinder China’s economic progress,” she said. “We believe a strong Chinese economy is a good thing,” she added.

The secretary’s comments came weeks after the White House announced restrictions on investments by US venture capital and private equity firms, and joint ventures, in Chinese artificial intelligence, quantum computing and semiconductors.

They also echo previous remarks by Treasury Secretary Yellen, who traveled to Beijing in July and said she wanted to allay “fears that we would do something that would have broad-based impacts on the Chinese economy.”

Raimondo’s visit, however, follows allegations by US officials in July that she had been the target of an email hack by China-based hackers.

A tense environment

Raimondo is also expected to discuss the treatment of American companies in China amid a crackdown on international consulting firms on the grounds of national security and a recent expansion of China’s counterespionage law.

China announced in July that it had fined Mintz Group, a US corporate due diligence firm, about $1.5 million for allegedly conducting unapproved statistical work in the country.

Chinese officials had earlier closed the group’s Beijing office in March. In May, state security authorities also said they had raided several offices of Capvision, an advisory network, a month after police questioned employees at the Shanghai office of consultancy Bain.

The moves coincided with a tightening of China’s counterespionage law in April, which expanded the list of activities that could be considered spying, increasing the risks for international firms.

Both campaigns “have undermined foreign business confidence in the Chinese market, leading many Western law and consulting firms to downsize or close their China offices,” Eurasia Group analysts noted in a Saturday report.

Dentons, the world’s biggest law firm by number of employees, appears to be one of them. Earlier this month, it announced a split from its business in China, saying it would start operating as a separate legal entity in response to intensifying regulation in the country.

However, China is currently under the gun to drum up foreign investment as it battles an economic slowdown.

Many economists believe the country may now expand by less than 5% this year, below its official growth target of around 5.5%, with several top investment banks recently downgrading their GDP forecasts.

The “weak domestic economic outlook will motivate Beijing to lower external tensions,” including with Washington, Eurasia Group analysts predicted.

This was seen last week, as Chinese Premier Li Qiang met with officials at the US-China Business Council. During the exchange, Li pledged openness, vowing to expand market access and ensure “that foreign-funded enterprises receive treatment equal to domestic firms,” according to state-run news agency Xinhua.

But to improve relations, both countries need to meet each other halfway, he was quoted as saying.

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— CNN’s Jadyn Sham contributed reporting.