U.S. Commerce Secretary asks China for more business predictability

BEIJING — U.S. Commerce Secretary Gina Raimondo has called on China to improve the predictability of the business environment for American companies in the country.

“My message was there’s a desire to do business, but we need predictability, due process and a level playing field,” Raimondo said in an exclusive interview with CNBC’s Eunice Yoon on Wednesday.

“There’s an appetite certainly for U.S. business to continue to do business in China,” she said, adding however that “It’s an unlevel playing field for U.S. business. It’s unpredictable.”

Raimondo was in China this week and met government officials in both Beijing and Shanghai. She is the first U.S. Commerce secretary to travel to the country in five years — a period that’s seen the bilateral relationship grow increasingly tense.

Foreign companies in China have long complained about market access challenges including forced tech transfers and preferential treatment for local companies, especially state-owned enterprises.

Those issues and China’s longstanding trade surplus with the U.S. contributed to the Trump administration’s decision to levy tariffs on China in 2018, followed by restricting certain Chinese companies’ ability to buy from U.S. suppliers.

Increasingly, the U.S. government has emphasized the goal is to ensure national security.

Raimondo held firm on that point in her remarks.

“We just cannot allow sophisticated emerging technology from America to advance China’s military,” she said. “I’ll do whatever it takes to meet that mission.”

The U.S. Department of Commerce’s Bureau of Industry and Security last year announced export controls to limit Chinese access to advanced semiconductors. This month, the Biden administration revealed a proposal to restrict U.S. investment into high-end Chinese tech.

Beijing also has national security in mind.

The Chinese government this year updated its counterespionage law, alongside a few high-profile raids on international consulting firms — developments that rattled foreign businesses.

The updated law is of “great concern” to U.S. companies, Raimondo said.

She said clarifying the new parts of the counterespionage law would a helpful, concrete action Beijing could take.

“Actions speak louder than words,” Raimondo said. “In all of my meetings, speaking with the premier and the vice premier, they were gracious, they were open.”

“They said that China wants to embrace American business,” she told CNBC. “So now, let’s back that up with concrete actions to create a more predictable business environment. To, as you say, grow confidence.”

Foreign business organizations have noted improvements over the years in China’s protection of intellectual property. The country is also trying to improve its court system.

Recent high-level Chinese government statements have included general calls to create a more predictable environment, and encourage foreign investment.

“China and the U.S. agree to continue to maintain communication, and support practical cooperation between businesses from both countries,” according to a CNBC translation of the Chinese-language readout of Raimondo’s meeting with Vice Premier He Lifeng. He is also the Chinese leader on China-U.S. trade and economic affairs.

This week, the U.S. and China agreed to establish regular communication channels on commerce, export controls and protecting trade secrets.

Stephen Olson, senior research fellow at the Hinrich Foundation, cautioned against expecting real breakthroughs from increased communication alone.

“The Raimondo trip highlights the fundamental contradiction at the heart of the Biden administration’s China strategy,” he said. “It is putting a stranglehold on China’s access to critical technologies while at the same seeking to maintain if not expand trade and investment opportunities with China in those areas that suit U.S. interests.”

“China will continue to believe that the U.S. is determined to block its rise, and the U.S. will continue to believe that China is determined to usurp the post-war global order.”

Raimondo wrapped up her China trip with a visit with Boeing executives at a company facility in Shanghai.

The U.S. aircraft giant is getting ready to resume 737 Max deliveries to China after a four-year hiatus, Bloomberg reported earlier this month, citing sources familiar with the situation.

When asked about a potential Boeing deal, Raimondo deferred to the company, but called it “an example of an action.”

“I know that the Chinese government has purchased these planes and we’re looking for them to take possession. I hope that that happens.”

Boeing did not immediately respond to a CNBC request for comment.