Good evening. Thank you Marc, for that kind introduction, and thank you to the U.S.-China Business Council for the invitation to speak tonight. Dr. Kissinger, Ambassador Roy, thank you as well for your service to our nation and to the Department of State. The intellectual rigor and dedication that you brought to the State Department lives on, and I for one am humbled to be walking in your footsteps.
Ambassador Qin, it’s a pleasure to meet you.
I am delighted to join you tonight to discuss the Biden-Harris Administration’s approach to China, and what that means for the American business community.
The U.S.-China relationship has a profound impact on both of our economies, and on the world’s. China’s economic growth has few parallels in history. Today, it accounts for nearly 15 percent of global exports, and its growth has enabled hundreds of millions of Chinese people to climb out of poverty.
The U.S. Welcomes economic competition with China. As president Biden has noted, we prepare to compete by first building up our core strengths: investing in our domestic economy here at home, and working with allies and partners to uphold the rules that allow international economic competition to take place on a level playing field.
On the Domestic front, President Biden recently signed a $1 trillion bipartisan bill to rebuild America’s physical and digital infrastructure, tackle the climate crisis, and invest in communities around the country. Congress is now working on a $1.75 trillion investment in American families and workers. And we are also hoping that Congress will pass legislation to make long overdue investments in U.S. technology, including funding The Chips for America Act.
These actions represent a generational investment in our domestic renewal. Our aim is to reinvigorate our greatest strengths: a vibrant and productive middle class, upgraded infrastructure, competitive markets, and an accelerated clean energy transition.
But our competitive advantage does not rest solely on our own success. It is also based on unparalleled alliances that are critical for shared growth. That is why we are working to strengthen those partnerships, and to leverage them to support American businesses and workers. We are cooperating with Europe through the U.S.-EU Trade and Technology Council as well as the U.S.-EU Summit to remove bilateral irritants, diversify supply chains, promote worker rights, and address distortionary non-market trade practices. Through the G-7 and the OECD, we are widening the circle of nations that share our values and seek to promote the rule of law and market economics. And in the Quad, we are working with Japan, Australia, and India to address the global COVID-19 pandemic and establish democratic principles for technology use and governance.
In short, we are working to build back better, both at home and abroad.
That’s how the United States intends to compete in the global marketplace. We have faith in our ability to win on a level playing field, and so do our companies. Many of the businesses gathered here have played an important role in the U.S.-China economic relationship, and total U.S. Foreign Direct Investment in China currently exceeds $123 billion. It is clear that our companies want to compete in China.
But unfortunately, it is also clear that Beijing is pursuing a state-centered economic model that tilts the field by deploying policies that disadvantage U.S. businesses and other foreign companies in sectors deemed “strategic.”
For example, any of us can easily access Baidu, but Chinese officials block Twitter and other U.S. social media in their own market, even as they deploy those same platforms to spread propaganda abroad. The state-owned China Daily is available right here in Washington, but private U.S. news outlets like The New York Times and The Wall Street Journal are banned in China. Foreign cloud service providers must enter joint ventures with PRC firms, but Alibaba has its own data centers in the United States. Most American movies cannot be shown in Chinese theaters. These and other lopsided market access barriers have persisted for years.
PRC subsidies are another concern shared by many nations. Beijing refuses to report accurately on the full range of subsidies it uses to support PRC companies (which raises doubts about its WTO commitments), but outside estimates tell us that Beijing provides hundreds of billions of dollars in direct subsidies to the industries outlined in its Made in China 2025 plan. And since that plan only covers ten industries, we know this estimate is low. A market where your competitors are receiving hidden preferential subsidies is neither free nor fair. We welcome fair competition, but not competition that tilts the playing field against American workers and companies.
Now, I know you know this. Many of you in this room have been forced to transfer your intellectual property to your PRC-based joint venture “partners.” Those transfers are not voluntary. Beijing makes them a pre-condition for market access.
Many of you in this room have also come to us to share your concerns about the growing risks you face in the PRC. You have requested our assistance while at the same time asking us to protect your identity for fear that speaking up will trigger reprisals. Companies from other nations come to us as well. That is not a healthy business environment.
As we review this situation, let us keep in mind that China’s market distortions are not random. For decades, PRC leaders have stated that their objective is to reduce China’s dependence on foreign companies. The explicit goal of Beijing’s approach to industrial policy is to replace U.S. and other foreign firms, first in the PRC, and then globally. Beijing has even set specific targets—dates, by which they want PRC companies to take specified market share from many of you.
In sum, the PRC is doubling down on an economic model that is fundamentally at odds with the market-based global system that enabled China’s economy to grow. The PRC is using that system to access global markets without adhering to the norms that enable fair competition, and it is using its economic heft to coerce other countries and companies. This is a direct challenge to the United States and our allies that the Biden-Harris Administration is determined to tackle.
So where does this leave us? Presidents Biden and Xi spoke last month. They discussed our complex relationship and the importance of responsibly managing the competition between our two countries. We have areas where our interests align, and areas where our interests, values, and perspectives diverge.
Where our interests align, we will seek to work together, particularly on transnational challenges. For example, our two governments recognize the need to engage bilaterally on climate change, as outlined in the U.S.-China joint declaration at Glasgow. And we intend to pursue that collaboration in earnest given the existential threats we all face from the climate crisis.
And we do welcome U.S.-China commerce where there is a level playing field and doing business does not undermine our national security or our values. Commerce can bring countries together, and the huge trade and investment flows between our countries benefit millions of workers and consumers on both sides of the Pacific.
But with the PRC, commerce also brings risks that our companies should not ignore.
For example, the risks of doing business in Hong Kong continue to grow following actions taken by the PRC and Hong Kong governments. That is why in July the U.S. government issued an advisory highlighting the risks that U.S. businesses face, which include:
- Warrantless electronic surveillance;
- Surrender of corporate and customer data to PRC authorities; and
- Potential retaliation against companies that comply with U.S. or Foreign sanctions.
U.S. businesses also face risks that their supply chains and investments may have links to forced labor and intrusive surveillance in Xinjiang. The U.S. government has detailed these and other risks in an updated Xinjiang Supply Chain Business Advisory to help American businesses avoid becoming complicit in forced labor and other human rights atrocities.
We believe that at your best, American companies are ambassadors for our values. This is what sets our economic and trade practices apart. Your activities are not just good business opportunities. They also showcase what America stands for. As your members have pointed out to me, 7 of the top 10 “best companies to work for in China” are from the United States. The standards you uphold are part of the reason we sometimes ask you to forgo opportunities that would be available to you if only you would pay a bribe, ignore environmental best practices, or use forced labor.
As you focus on this market, please keep in mind that you are not bystanders in the broader strategic relationship. Above all, be mindful how your activities can affect U.S. National Security and the fundamental values we hold dear.
As for this Administration, we will defend our companies and workers against an unfair economic playing field. If we must choose between profits versus complicity in undermining our values, we will choose what’s right, every time. And we will stand up to economic coercion, whether directed at countries, companies, artists, or athletes.
In closing, let me make it clear to you that we want you to succeed. We want you to succeed today, and we want you to thrive for many years to come. That is why as you navigate the complex relationship between the United States and China, my door, and those of my colleagues at the State Department, will always be open.
Thank you again to the U.S.-China Business Council for this opportunity.