US-China relations: Gina Raimondo’s ‘reality check’ in China seen paving way for Xi-Biden meeting as tensions persist

US Commerce Secretary Gina Raimondo’s visit to China will set the stage for top-level leadership meetings and serve as a “reality check” on American business in China’s struggling economy, according to Chinese analysts.

Raimondo’s trip, from Sunday to Wednesday, would make her the latest US official dispatched to China since June, in a sign that stalled high-level visits between the world’s largest economies are resuming amid growing tensions stemming from geopolitical wrangling.

Geopolitical experts also see her visit as another step toward a meeting between presidents Xi Jinping and Joe Biden in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation (Apec) Leaders’ Meeting in November.

Yet, Raimondo’s China itinerary appears different from those of previous US officials, as it includes a stop in Shanghai along with Beijing, where she is expected to meet high-ranking officials.

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A source with knowledge of Raimondo’s trip told the Post that she will meet with the Shanghai party secretary and the American Chamber of Commerce in Shanghai, along with visits to New York University Shanghai and, tentatively, Shanghai Disneyland.

Shanghai is China’s commercial capital for foreign investment and where more than 1,000 American companies are registered with AmCham Shanghai.

“[It is] a fairly light schedule from a policy standpoint, which suggests her visit is to reinforce stable US-China communications ahead of the upcoming Apec meeting,” the source said on condition of anonymity.

Pang Zhongying, a chair professor in international political economy at Sichuan University in Chengdu, said Raimondo’s trip comes at a time when American business could be shifting away from China due to political and economic concerns.

“Her stop in Shanghai means she will engage with major American business representatives in China, to understand how they are operating in the current economy, and to make a fresh assessment of China’s business environment,” Pang said.

China’s economy is recovering slower than expected. The nation’s gross domestic product (GDP) grew just 0.8 per cent in the second quarter compared with the first quarter – down from 2.2 per cent in the first three months of 2023. Overall foreign direct investment to China also dropped by 9.8 per cent, year on year, in the first seven months of 2023, according to the Ministry of Commerce.

And for the first time in the 25-year history of AmCham China’s Business Climate Survey, firms said earlier this year that China was no longer a “ top-three investment priority”.

While Raimondo has repeated calls by Biden and other Western leaders – that they are looking to “de-risk” instead of “decouple” from China in the supply chain – Pang said American business could still be leaving China for economic reasons.

“In a way, her trip could be a reality check for the US – to prepare as more American business could be withdrawing from the Chinese market,” Pang said.

[T]he Biden administration’s diplomatic gestures and economic coercive policies go hand in hand

Ren Xiao, Fudan University

In the lead-up to Raimondo’s visit, US commerce officials on Monday announced the removal of 27 Chinese entities from its unverified list, a de facto trade restriction that subjects identified companies to more stringent scrutiny than normal before they are allowed to do business with US suppliers.

Just weeks ago, Biden signed an executive order to add a screening mechanism in the US Treasury, for American investment in private equity and venture capital in China’s semiconductors, artificial intelligence and quantum computing, citing “national security” concerns.

“By now, it is clear that the Biden administration’s diplomatic gestures and economic coercive policies go hand in hand,” said Ren Xiao, a professor and director of the Centre for the Study of Chinese Foreign Policy at Fudan University.

Beijing similarly cited national-security grounds earlier this year when cracking down on foreign consultancies, prompting warnings that China was scaring away investors.

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Raimondo’s scheduled meetings represent the fourth major Beijing sit-down between the two sides this summer, following trips by Secretary of State Antony Blinken, Treasury Secretary Janet Yellen and climate envoy John Kerry. Veteran US diplomat Henry Kissinger was also given a red-carpet welcome in his return to Beijing last month.

“Raimondo’s visit would be a continuation of the gesture that both sides are willing to continue communicating, which is better than nothing,” Ren said.

During a meeting with Raimondo in the US on Tuesday, China’s ambassador to the US, Xie Feng, touched on areas of concern and called for Washington to take “substantial action” toward resolving trade and economic problems and to stabilise relations.

Premier Li Qiang also took an opportunity this week to express his concerns over bilateral relations as he received a US delegation.

“At present, China-US relations and economic and trade cooperation are facing some difficulties, which require both sides to show sincerity … and make joint efforts,” Li told the US-China Business Council delegation led by its chair, Marc Casper, on Monday, according to the state news agency Xinhua.

Moving forward, Ren and Pang both noted that the big question is when Xi and Biden may meet, and “whether Xi would actually pay a state visit to the US”, on top of the Apec meeting.

“I don’t think they have decided on that, yet,” Ren said.

South China Morning Post