President Donald Trump’s softening stance towards China has eased the worst fears of American businesses in the country about the prospects of a trade war, prompting US executives to refocus their attention on a drive to ease Chinese investment restrictions.
“I don’t think [trade tariffs] are going to be one of the top priorities because my sense is the administration has probably seen this may not be the most effective way to apply pressure,” William Zarit, chairman of the American Chamber of Commerce in Beijing, told reporters in the Chinese capital on Tuesday. He called it a “hot topic” during his earlier meetings in Washington but said it was no longer a serious option.
“The administration is looking for a number of other points of leverage and points of pressure to apply to the Chinese to persuade China to open their markets and level the playing field,” Mr Zarit said.
When China-based US executives meet members of the US Congress next month, they intend to revive a plan for a bilateral investment treaty. As recently as February, the anxious executives rushed to Washington for urgent meetings with the Trump administration to counter the threat of 45 per cent tariffs on Chinese-made goods.
President Trump ran on a ticket that emphasised measures to protect US manufacturers, a policy that alarmed China-based US businesses. Peter Navarro, Mr Trump’s pick to direct the new National Trade Office, is a well-known hawk on China, and has been one of the biggest proponents of high import tariffs on Chinese products.
Those fears have abated since Mr Trump backed off from several campaign trail commitments. In an about-face, he announced last week that he would not label China a currency manipulator and has tweeted that he would offer China trade concessions if it helped defuse tensions on the Korean peninsula.
“The reality check is what seems good on the campaign trail is really not the most important in priorities,” said Lester Ross, a lawyer and chairman for AmCham Beijing’s policy committee.
Instead, American businesses are focusing on amending what they see as an unequal investment relationship. For example, American carmakers must form joint ventures with a 50 per cent foreign equity cap to invest in China, whereas Chinese motor groups face no such restrictions in the US.
The Obama administration was in the process of negotiating a shorter “negative list” of investment areas off-limits to foreign investors in China. The list was part of an overall bilateral investment treaty designed to simplify and promote US investment in China.
Yet those negotiations have stalled under the new administration. Key trade positions, including those in the International Trade Commission, continue to go unfilled more than three months into the president’s term.