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US-China tensions

Biden crackdown on Beijing dims hopes for Chinese companies in US

Survey shows more businesses had expected better bilateral relations after Trump

U.S. President Joe Biden has cited national security risks and reinvigorating the American economy as key reasons for restricting trade with some Chinese companies. (Nikkei montage/Reuters/AP)

PALO ALTO, U.S. -- President Joe Biden's recent crackdown on Chinese companies is testing early optimism that U.S.-Sino relations and business prospects would improve under his watch.

After Biden defeated incumbent Donald Trump at the polls last November, 39% of Chinese companies in the U.S. expected better relations between Washington and Beijing, according to an annual survey released on Thursday by the New York-based China General Chamber of Commerce, up from 33% in 2020. By comparison, 25% of the surveyed companies anticipated relations to further deteriorate, down from 30% last year.

The results of the nonprofit's survey include responses from 183 companies collected in March and April.

The timing of the report, however, means it does not "sufficiently and accurately" reflect the companies' feelings about Biden's more recent China-related policies, said Abby Li, director of research at CGCC.

"After President Biden took office, we certainly saw some optimism towards a more predictable China strategy from the current administration, especially during interviews with those companies' executives," said Li.

But in the past month, the Biden administration has rolled out several executive orders and other moves aimed at countering China.

On Thursday, the administration banned U.S. imports of a key solar panel material from China-based Hoshine Silicon Industry Co. over allegations of forced labor in Xinjiang. The day before, the Department of Commerce added five Chinese companies to its Entity List -- a trade blacklist -- on similar grounds.

Early this month, Biden withdrew a series of Trump-era executive orders that sought to ban new downloads of WeChat and TikTok, but also ordered a broad security review of apps connected to "foreign adversaries," including China.

Another executive order issued in June banned U.S. investment in 59 Chinese defense and surveillance technology companies.

Meanwhile, the U.S. Senate this month passed a $250 billion comprehensive bill to fund America's race for technological leadership against China. The bill earmarks about $190 billion for provisions to strengthen U.S. research and technology and $54 billion to support the domestic semiconductor sector. The bill must next clear the House of Representatives, the lower house of Congress, and then be signed into law by the president.

"I think the Biden administration has shocked a lot of people, especially overseas, because I don't think anybody was expecting him to be as tough [to China] as he is now," said Brad Gastwirth, chief technology strategist at Los Angeles-based investment firm Wedbush Securities.

The Biden administration's moves since January are particularly dismaying for Chinese tech companies, which had hoped the new president would improve deteriorating bilateral relations and reverse the tech-decoupling trend that had begun under Trump.

"The recent Biden executive orders are very much a continuation of the thrust by the Trump administration's policies," said Stephen Ezell, vice president of global innovation policy at Information Technology and Innovation Foundation, a Washington-based think tank.

Both the Biden and Trump administrations cited potential national security risks, protecting U.S. user data, and reinvigorating the American economy as key reasons for restricting trade with some Chinese companies and cracking down on certain technologies from China.

Their approaches, however, differ in important ways, according to industry experts.

"The Biden administration has modified its approach to be more compliant with the law, but also more effective in restricting the access for Chinese companies in the U.S. market," said Timothy Heath, senior international and defense researcher at the global policy think tank Rand Corp.

"I think the only big difference [between Trump and Biden] is that there seems to be a little bit more calculation with Biden. I think Trump is a little bit more off-the-cuff and Biden seems to be a little bit more planned through," Gastwirth said.

The challenging environment for Chinese companies in the U.S. may not improve anytime soon, either, as a tough stance toward China is one of the few issues that enjoys bipartisan support in Washington.

Some Chinese companies, however, see a silver lining in the situation.

"Our observation is that President Biden and his administration are committed to restoring the rule of law and justice while adopting a rules-based approach abroad. This is reassuring for businesses which operate globally and internationally, including Huawei," said Glenn Schloss, a vice president at Huawei USA.

Huawei has been calling for discussions with the Biden administration "separately" from Beijing to resolve issues including the U.S. export ban on the company and the detention of its CFO Meng Wanzhou, but has not yet engaged with the administration.

The greater consistency of the Biden administration's policies is also seen as an improvement by some Chinese companies.

"Last year, you literally did not know what would happen the next day, because there was no way to tell what Trump would do next. Biden seems to be more predictable," which offers businesses more stability, said an executive at a Chinese tech firm who asked not to be named.

While the competition between China and the U.S. will surely persist, Biden's more considered, rules-based approach to China could benefit businesses in both countries.

"To make progress on U.S.-China trade and economic challenges, one of the keys will be stability, consistency and coherence in U.S. foreign policymaking," Ezell said.

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