United States Trade Representative Katherine Tai said that recent trade talks with China have been “unduly difficult” and that the U.S. should focus on domestic development to maintain its “global competitive edge.” Representative Tai spoke before the House Ways and Means Committee to urge the passing of the long-stalled China competition bill, which the Senate passed on March 28.
Both the House and Senate versions of the bill aim to boost the domestic semiconductor industry by providing $52 billion in grants and incentives to enhance chip manufacturing, “jump start innovation,” and bring key industries back stateside. The legislation has received support from the Biden administration, and Senator Chuck Schumer and Nancy Pelosi will start working together to put together a bill that will pass in both chambers.
According to the American Chamber of Commerce in China, optimism from American businesses operating in China has dropped from 45% when Biden was first elected in 2020 to 27%, the same levels during the Trump administration. Trump era tariffs have largely remained in place, and Beijing’s regulatory crackdowns, China’s economic slowdown, and COVID-19 travel restrictions have also complicated U.S. business operations on the mainland. Additionally, geopolitical tensions between the two nations have led to U.S. businesses feeling increasingly unwelcome in China.
Although China’s economy rebounded last year with its highest growth in a decade, it was experiencing a slowdown by the tail end of 2021. In March this year, data indicated a slowdown in China’s services and manufacturing sector that could make it difficult for China to meet its current 5.5% growth target.
Several top Chinese officials have said that China is facing greater uncertainty due to a variety of global and domestic factors. Chinese Commerce Minister Wang Wentao said that foreign trade is facing external pressures such as uncertain demand, labor shortages, and the high costs of raw materials. As a result, Wang is calling on China to “do everything possible” to encourage domestic consumption.
The government has also put Shanghai, China’s international financial center, on lockdown after a recent COVID outbreak, which has given some investors concerns over further economic disruptions. Shanghai is also a major hub for semiconductor, electronics, and car manufacturing, as well as the world’s busiest shipping port. Although many other world economies have loosened COVID restrictions and reopened borders, China seems to be sticking to its strict COVID protocol.
Chinese tech companies Baidu, iQiyi, and Weibo have been added by the U.S. Securities and Exchange Commission to the Holding Foreign Companies Accountable Act (HFCAA). The Trump era law requires foreign companies listed on U.S. stock exchanges to comply with U.S. audit inspections, or else risk being delisted. Two U.S.-based companies were also added by the SEC.
Currently, there are about 200 Chinese companies listed on U.S. exchanges. Beijing does not allow offshore audit and data accounting, but it has given the China Securities Regulatory Commission (CSRC) to comply with foreign accounting regulations. The CSRC is considering an approach of having the foreign ministry vet data for state secrets and personal information before handing it over for auditing.
Due to widespread COVID-related theater closures in China, Warner Bros. and DC’s “The Batman” opened with a weaker than expected $12.1 million. Prior to the outbreak in China, the film was tracking to open with $25 million.
Although the numbers are disappointing, the film still opened in the number one spot in China, and Chinese ticketing app Maoyan expects the film to cap out around $26 million. “The Batman” has had the best opening weekend in China of any Hollywood release, even with up to 43% of theaters temporarily closed, and has strong reviews from Chinese audiences.
Hollywood has a few other films slated to open in China: Roland Emmerich’s science fiction epic “Moonfall,” which was partly financed by East West Bank; Sony’s animated sequel “Hotel Transylvania: Transformania” and Warner Bros.’ “Fantastic Beasts: The Secrets of Dumbledore.”
China’s largest electric vehicle (EV) maker announced that it had stopped production of combustion engine cars in March and is now only producing fully electric and plug-in hybrid vehicles. However, BYD will still produce smaller “highly efficient” combustion engines for their hybrids. The move comes as part of the Chinese government’s own clean energy goals, which aim to reach peak carbon emissions by 2030 and to entirely phase out combustion engine vehicles by 2040.
We’ll keep you in the know about the latest US-Asia business news and trends.
Lo mantendremos informado sobre las últimas noticias y tendencias comerciales entre Estados Unidos y China.