U.S. President Donald Trump and Chinese President Xi Jinping are meeting for the first time today at Mar-a-Lago. This historically early summit underscores the significance of the U.S.-China relationship. Our two countries share a highly interdependent, yet complex relationship that is critically important to both nations and the world. We hope the two leaders build a strong rapport at the summit that will allow them to advance a positive agenda and address rising challenges.
State of the U.S.-China Economic Relationship
While we expect the presidents to focus in part on shared security concerns, the economic and commercial relationship—long the foundation of bilateral ties—will also garner significant attention.
China’s accession to the World Trade Organization in 2001 gave the American business community significant confidence in China’s economic policy direction. More than 15 years later, U.S. industry continues to see significant economic opportunity in China. China is a $560 billion market for American companies —and could be significantly more. China was amongst the top three export market of goods for 33 U.S. states in 2015, and the total bilateral trade relationship supports roughly 2.6 million jobs in the United States. In short, the Chamber believes that a strong and balanced U.S.-China economic relationship is in the abiding interests of our members and our country.
Even so, the almost universally-shared positive sentiment across the business community generated by that event has waned. We’ve seen less opening and market reform than expected, and the legacies of the command economy continue to hinder China’s integration into the global economy.
For example, China’s recently issued Made in China (MIC) 2025 plan, a ten-year blueprint aimed at transforming China into an advanced manufacturing leader. Regrettably, MIC 2025 puts China on path toward separation from the global economy rather than integration, as a recent Chamber report highlights. Through MIC 2025 policies, Beijing is deploying a raft of measures to drive data, technology, and production into China—with significant implications for the future location of innovation in the global economy. These policies increasingly appear designed to create advantage for Chinese companies and sideline U.S. and other foreign companies.
The Chamber conducted a study last year examining these policy tools in China and globally. Economic modeling in the report found that a decision to purge foreign ICT product and service providers from the market would result in annual reduction in China’s GDP anywhere from 1.77–3.44%, or at least $200 billion based on 2015 GDP—thus harming both the U.S. and Chinese economies.
To ensure the continued healthy development of bilateral commercial relations, MIC 2025 and related state-led economic development policies should be top of the agenda for government-to-government discussions. In addition to a focus on the important issue of overcapacity, we encourage President Trump to emphasize policy concerns affecting industries of the future, like advanced manufacturing and the cloud computing services that will support it. We hope there can be a discussion of what China is doing to advance market reforms and openness—as opposed to closing and industrial policy—in these crucial areas for all in the global economy.
An Economic Relationship Too Big to Fail
While our concerns in certain areas are real and growing, the economic relationship between the U.S. and China is too big to fail. Together, the U.S. and China represent 40 percent of the global economy. Both sides must continue to strive for cooperation and constructively work through challenges. There also remain significant unrealized commercial opportunities that can help to drive a mutually beneficial relationship well into the future.
But make no mistake: it’s going to take hard work on both sides and a commitment by China to press forward with reforms that remove protections and support for anointed champions, open its market wider to imports and foreign investment, and foster regulation that supports genuine competition.
For our part, the U.S. Chamber will continue to be a leading steward of the bilateral relationship. We will continue to call on our leaders to demonstrate clarity, common sense, and maturity in our commercial relations. We will work with the Trump Administration, China’s leaders, and both private sectors to advance our shared interests and a positive agenda, including through more robust trade and investment promotion and deeper sub-national cooperation. We will strongly support international trade rules and agreements as well as U.S. trade enforcement based on facts, not politics.
Again, our sincere hope is the summit helps both leaders to build a strong personal rapport and encourages a broad understanding of our strategic relationship. We also hope both presidents succeed in laying a foundation for sustained progress over the coming months and years. Strong and enduring bilateral ties are essential as the relationship transitions from one driven by process and dialogue to one focused on outcomes and results. This bilateral relationship, more than any other, is essential to the tackling shared geostrategic challenges, and driving growth in the global economy.