Live from the US-China Business Council: The bilateral trade relationship in 2019

This week on the Sinica Podcast, we’re live from the US-China Business Council’s Forecast 2019 Conference in Washington, D.C. This show was recorded on January 31 — the day (and hour) that Donald Trump met with China’s top official in charge of trade negotiations, Liu He. Kaiser and Jeremy spoke with Tim Stratford, the chairman of the American Chamber of Commerce (AmCham) in the People's Republic of China, and with Craig Allen, the president of the US-China Business Council. Stratford has also headed the leading law firm Covington’s office in China for many years, while Allen has had a long career representing American economic interests at the Department of Commerce and in the State Department, most recently as the U.S. ambassador to Brunei. The wide-ranging conversation covers everything from technology policies to the structural changes that China is being asked to make to address U.S. complaints over unfair trade practices. What to listen for on this week’s Sinica Podcast: “If you want a quiet life, don’t study China.” —Ambassador J. Stapleton Roy, per Craig Allen 5:22: Tim offers an analogy to describe the U.S.-China competitive relationship: a football match with one side playing American style, the other playing English style. “So, think of a Chinese SOE as an American-style football player that’s protected — it can receive subsidies and it can receive other protections from the state and it’s competing against, say, an American company that’s out there to play English-style football — and you can see how there could be an injury.” 15:14: The foreign business community, previously a reliable ballast in the bilateral relationship between the U.S. and China, has soured in recent years. According to Tim, results in the annual Business Climate Review conducted by the American Chamber of Commerce in China were shocking, with 75 to 80 percent of its membership saying they feel less welcome than in the past. He explains: “There’s a credibility gap that still needs to be addressed, and I also think that a lot of things that have been offered up by the government have not really addressed the core structural issues we’ve been addressing.” 24:48: Is the Trump administration committed to technological decoupling? Craig notes: “There is a sense that seems to be shared between national security elites both in Beijing and in Washington — that both countries are too interdependent from a supply chain and technological perspective… It is clear that a lot of new thought is going into our export control plans and to our investment regimes, and it is very likely that the tightening up of both of those programs are going to have an effect on supply chains and innovation.” 30:48: To finish the live show, Tim and Craig do a bit of forecasting for the new year. Tim contends, “It’s going to take a little bit longer than just one year. I think it’s going to take three, four, or five years, even.” Craig emphasizes the relative health of the U.S. and Chinese economies, stating, “My hope is that both governments will both congeal around the rules that both have formally agreed to under the WTO and find common ground in the technology, trade, and investment space.” Recommendations: Jeremy: Civics study materials for the United States naturalization test, and Hello Gold Mountain, an original composition by Wu Fei for chamber orchestra, which tells the story of Jews who fled Europe for Shanghai after World War II. Craig: Identity: The Demand for Dignity and the Politics of Resentment, by Francis Fukuyama. Tim: “Building a better deal with China,” by Scott Kennedy and Daniel H. Rosen. Kaiser: The Water Margin Podcast: Outlaws of the Marsh, by John Zhu, a retelling of one of the four classic Chinese novels in English.