(Note: This is part of a series of articles on China’s business and economic outlook in 2024.)
A period of relative stability in U.S.-China relations since the APEC meeting between President Joe Biden and Chinese President Xi Jinping in November will likely lead to a period of relative stability in U.S.-China relations since the APEC meeting between President Joe Biden and Chinese President Xi Jinping in 2024. Ken Jarrett, a senior adviser and longtime China expert at Albright Stonebridge Group, said in an interview.
“The overall trend for next year will be a test of the stability established by the APEC conference,” Jarrett said. The Shanghai-based executive spent 26 years at the U.S. diplomatic service before joining the American Chamber of Commerce in Shanghai as president in 2013, joining Albright Stonebridge five years later. Mr. Jarrett’s roles in the Washington government included director of Asia affairs on the White House National Security Council.
“Neither side wants the situation to deteriorate further,” he said. “This year will end with our two governments consulting again at all levels, not just the high level. And that’s a good thing.”
2023 has been marked by unstable relations and strained communications, particularly after the appearance of what appeared to be Chinese spy balloons over the American mainland at the beginning of the year. Since the long-awaited APEC talks between the two leaders, the first in a year, the Chinese government has made significant changes to U.S. businesses, including approving Mastercard’s application to clear bank cards in China and agreeing to Broadcom’s acquisition of VMware. We are taking positive steps. The complicated visa procedures and fees have also been reduced. US Ambassador to China Nicholas Burns and Chinese Ambassador to the US Xie Feng attended a dinner together in Washington this month to commemorate the company’s 52nd anniversary.n.d. Anniversary of “ping-pong” diplomacy between the two countries.
However, underscoring that the situation could quickly deteriorate, China on December 26 sanctioned US research firm Kalon for its work related to forced labor. Earlier this month, U.S. Secretary of Commerce Gina Raimondo reportedly told a group in Silicon Valley that China was “not our friend” and “the greatest threat we’ve ever had.” This led to a rebuke from the government. “That’s something they feel strongly about,” Jarrett said.
Perhaps the biggest immediate potential risk may arise from Taiwan’s January 13 presidential election – mainland criticism of the incumbent Democratic Progressive Party (DPP) and a significant increase in mainland military activity around Taiwan. There is “huge uncertainty”, Jarrett said. A recent island. China claims sovereignty over the autonomous government of Taiwan, a democratic nation with a population of 23 million people and the world’s leading supplier of semiconductors.
Jarrett said the question for Taiwan’s new president when taking office is whether to abide by the current understanding of the United States, China and Taipei and Taiwan’s status. A victory for the Democratic Progressive Party, which polls suggest is leading in a three-way race, “will naturally cause some anxiety for China, which wants to test the new government. That’s always a danger. That’s true.”
Next year’s US elections also pose risks, given recent heavy criticism of China by both major American political parties. “Next year will certainly test our current stability because of the[U.S.]election and the actions we have taken during that time,” Jarrett said. “If the Republican nominee is President Trump, there will be some fireworks over what President Trump might say about U.S.-China relations, which will cause unnecessary anxiety on the Chinese side.” President Trump Republican rivals Ron DeSantis and Nikki Haley have also criticized the Chinese government.
Despite China’s gestures and stated interest in attracting foreign investment, the U.S. business community will remain wary of the country, Jarrett said. “The foreign business community’s skepticism remains strong,” he said. He said China’s “small steps are welcome, but at this point they are not enough to bring about a reversal in the overall balance of power.”
“The Chinese economy is not doing well, which means opportunities for foreign companies are also somewhat reduced,” Jarrett said. “The geopolitical risks of doing business in China remain high. Even though companies are being asked to accept greater geopolitical risks, without greater economic benefits, many companies will will look elsewhere.”
A positive for U.S. companies is that China’s economic problems may make the situation less dire than it would otherwise be. “China will be more tolerant than it has been in the past because of economic issues,” Jarrett said. This month’s Economic Action Conference in China suggested a possible shift away from security concerns toward a more “traditional focus on realism and economic growth that businesses can understand.”
Further pressure on China to focus on growth could also come from the current state of relations with Europe, which largely agrees with the United States on geopolitical issues involving China. “The US and EU are closely aligned on China policy, which puts China at a bit of a disadvantage. China has been looking for ways to break that bond. So that’s going to continue to be difficult for them,” Jarrett said. “Given the EU’s investigation into Chinese subsidies through the EV industry, there is a good chance that trade tensions with the EU will escalate next year,” he predicted.
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