US-Asia Business
US-China Market Watch: Bilateral Relations, China Economy, “Uncharted”
By Angela Bao
Your monthly roundup of the latest US-China business and industry news.
U.S.-China relations tense over Taiwan, Ukraine, trade
Tensions between the United States and China over trade, Taiwan, and other issues have continued to simmer in light of Russia’s attack on Ukraine (China, along with India and the United Arab Emirates, has largely remained silent on Russia’s actions).
At a virtual forum marking the 50th anniversary of Richard Nixon’s historic visit to China in 1972, Foreign Minister Wang Yi called on the U.S. to improve bilateral ties between the two nations. Wang reinforced the idea that the U.S. should see China as a partner rather than a competitor and that the two sides should work together. In recent years, the U.S. has implemented increasingly strict regulations and policy changes to combat perceived national security threats, ranging from tariffs on Chinese goods, to restricting foreign investment in certain industries. The U.S. has also claimed that China failed to meet commitments to the World Trade Organization to open up its markets to foreign competition.
During the forum, China’s Defense Ministry also “protested” the passage of a U.S. naval ship through the Taiwan Strait. Taiwan has increasingly become a point of contention for bilateral relations, especially with successive U.S. administrations approving arms sales and increasing diplomacy with the island.
China sets plan to stabilize economy
Beijing is bracing for sluggish economy in 2022, due to slow recovery in consumption, investment, exports, and a shortage of resources. In its annual government work report delivered by Premier Li Keqiang, the government will focus on domestic affairs for 2022, prioritizing social welfare, job creation, and economic growth. Although the report made no mention of Russia’s attack on Ukraine, China’s economic growth target of 5.5% indicates that the mainland is “shoring up” growth in the face of global uncertainty. However, China is also planning to increase its military budget by 7.1%, indicating that the mainland is planning for an increasingly fraught world.
China’s economic growth targets for 2022 are at its lowest in three decades, although it’s still higher than many economists believe China can achieve without government support. China’s economy grew 8.1% in 2021, although the pace of last four months slowed considerably.
Hollywood’s relationship with China still uncertain
Sony Pictures’ video game adaptation, “Uncharted,” is set to release in China on March 14, allowing the studio to breathe a small sigh of relief. Whereas a big budget action film starring Tom Holland (who also stars in Sony and Marvel’s Spider-Man franchise) would have been a surefire hit in China a few years ago, things are far from certain these days.
Several Hollywood tentpoles were never released in China, such as Marvel’s “Shang-Chi” and “Eternals,” in favor of domestic Chinese films. Even those Hollywood films that were approved by Chinese censors did not perform as expected, meaning the success of “Uncharted” in China is far from guaranteed. The latest James Bond movie and last to star Daniel Craig, “No Time to Die,” earned $64 million in China, compared to its 2015 predecessor “Spectre,” which earned over $83 million.
Some experts state that the seeming movement away from Hollywood stems from more than just a preference for Chinese content, although that is a factor. Beijing is also pushing greater nationalistic sentiment and “using film imports to punish political enemies.”
U.S. building up clean energy supply chain in response to China
The U.S. Department of Energy (DOE) released a plan to boost the States’ clean energy supply chain to wean itself off of its dependence on China in that sector. Along with President Biden announcing a tariff extension on solar panel and cell imports from China, the DOE announced it was spending $44 million to provide technologies to critical components for clean energy, as well as creating a manufacturing and supply chain office.
However, experts say that the U.S. is very far from achieving independence. China accounts for 70% of global solar module production, half of the global manufacturing of wind turbines, and 88% of global battery storage production capacity. Experts emphasize that if the U.S. really wants to be competitive with its own clean energy supply chain, it will require much more government financial support. Even so, some say that the gap is so large in areas such as solar modules that it would raise costs considerably.
China’s ZTE faces accusation of violating probation
Chinese telecommunications company ZTE Corp. is set to go back to U.S. federal court under accusations that it may have violated its probation from 2017, when ZTE pled guilty to illegally shipping U.S. technology to Iran.
The possible violation is related to alleged conspiracy to commit visa fraud by bringing Chinese nationals to the U.S. with work and study visas. If found guilty, the consequences for ZTE are unclear but would likely entail heavy fines and penalties. In 2017, ZTE paid $892 million for violating sanctions on Iran.