What scares investors away from China?

Lazy eyes listen


Hawkish Gina Raimondo, the US Secretary of Commerce, recently visited China on official business. She is the fourth senior US official to visit in recent months, indicating a stability – but not a breakthrough – in bilateral relations. In her letter, she chastised China for making its market “uninvestable” for US enterprises, and she urged Beijing to “take action to reduce the risk of doing business in the country.”

This is ironic for a variety of reasons. The most visible is that the Biden administration has announced curbs on US inbound foreign investment into China’s high-tech industries, including as semiconductors, quantum computing, supercomputing, and artificial intelligence. Although the measures are relatively narrow, Republican critics have claimed that they are the polar opposite of confidence-inspiring.

This conveys a story about America in and of itself. China is not making itself ‘uninvestable’; the US is doing so by purposefully creating a hostile geopolitical environment. The US does not want inbound investment into China and is increasing the dangers of such investments through the escalation of tensions and military concerns. Raimondo’s travel to Beijing is therefore quite hypocritical.

Washington’s narrative on China, as propagated by complicit media, is that Beijing is mostly to blame for frightening away international investors due to its increasing centralization under Xi Jinping’s administration. China is being characterized as isolationist, dogmatic, unreasonable, and ‘in decline,’ as well as being accused of ‘unfair’ economic practices. If only Beijing would open up more and welcome all of these investors, wouldn’t you agree? Everything would be alright,

Possibly, but only if the US had not: 1) imposed hundreds of billions of dollars in tariffs on Chinese exports, which it refuses to remove, despite high levels of inflation; 2) opportunistically blacklisted products from entire regions of China, such as Xinjiang, on the premise of ‘human rights abuses’; and 3) placed Chinese technology companies on the commerce department’s ‘entity list,’ prohibiting US companies from exporting to them, then black.

In addition to the sanctions, the US is purposefully militarizing China’s whole periphery with military outposts and inflaming tensions with Taiwan, taking advantage of global instability in the aftermath of the Ukraine war. Last but not least, the mass of news items and opinion condemning, attacking, accusing, and predicting doom for China grows by the day. Can the US honestly claim that China is scaring away investors in the midst of all of this? Sure, as the global environment has deteriorated, Beijing has tightened its grip, and the governing party has engaged in severe regulatory crackdowns on a number of enterprises, which hardly produces an investment-friendly atmosphere, but this is a result of the uneasiness caused by tensions.

When officials like Raimondo visit China and complain about adverse business conditions, the hypocrisy is stark, given that Washington has done more than anybody else to damage trust in Beijing. But, if that’s the case, why should she bother complaining? The answer is that the United States does not seek an equal economic relationship with China. Washington’s ideal relationship with Beijing is one in which it has complete access to the Chinese market and can sell whatever it wants, rather than one in which Chinese enterprises can compete fairly and squarely on a global basis.

This is the level of subordination it has long sought to impose on Europe, where it is casually destroying German industry by forcing its decoupling from Russian resources, selling overpriced gas, and then using protectionism via the “inflation reduction act” to disincentivize production. The US intends to economically control China; that is the only “investment” it has in mind, which is why visits like Raimondo’s are largely ineffective and a waste of time.