Elon Musk Visit To Beijing Highlights Business Role In U.S.-China Ties — AmCham China President

The appearance of Tesla billionaire entrepreneur icon Elon Musk in Beijing this week underscores the continuing importance of the China market to the U.S. amid geopolitical and military strains between the two countries, as well as the key role of businesses in Sino-U.S. ties, American Chamber of Commerce in China President Michael Hart said in an interview.

“Over the last three years, it’s (been) pretty obvious when the U.S. and Chinese governments weren’t talking to each other, the business community continued to play a very vital role to make sure that trade and discussions continued.” said Hart, speaking by Zoom after his return to Beijing following a “door knock” visit by a dozen chamber members to Washington, D.C. earlier this month. AmCham China has nearly 1,000 members including Apple, Merck, KKR, Morgan Stanley, Microsoft and Intel.

Some of the most frequent topics that arose during the trip involved national security and whether U.S.-China “engagement” in the last four decades hadn’t worked out from American perspective. “One of the things that we talked about was whether engaging with China a failure,” Hart said. “I don’t agree.”

Even amid slower-than-hoped China GDP growth this year, many American brands that were considered luxury goods not long ago have become everyday items in the world’s No. 2 economy – a benefit to U.S. businesses that doesn’t necessarily turn up in trade figures, said Hart, who became AmCham China president in 2022. Tesla, though not necessarily affordable for many, is itself a widely recognized American brand in China owing in part early global presence in the electric vehicle market and its large manufacturing hub in Shanghai. CEO Musk met China’s Foreign Minister Qin Gang in China’s capital on Tuesday, and the two spoke about trade and business issues, according to a statement by the ministry.

And though travel remains disrupted by Covid-era flight reductions this year, the opening of education and other exchanges over the decades between the U.S. and China has provided a large number of Chinese information than they might otherwise not obtain from the country’s own press. “If there is something in the Chinese media about the United States that’s negative, there are millions of Chinese students who studied in the United States or others who have traveled, have returned and would say that wasn’t my experience.”

And in China, he continued, “there are millions of people that work for U.S. companies or have worked with U.S. companies here who also say: ‘I had a pretty good job or career. I worked an American company that invested in me.’”

“Of course,” the U.S.-China trade imbalance persists and “China has not adopted all of the U.S.- led standards. That can be a challenge. But I think if anybody thought that China would become another United States by engagement from the U.S. was probably naive to begin with,” Hart said.

“We have to acknowledge the China is our main strategic rival, and during the trip, many conversations ended on national security, or headed towards national security — whether we were talking tech or data, or other areas like life science (and) bioscience,” he noted.

A solution is wider national attention in the U.S. to commerce with China, and greater efforts to safeguard American technology and intellectual property, suggested Hart, a native of Kansas City, Missouri, whose career in Asia has spanned more than a quarter century after landing in Taiwan in 1996. The graduate of the University of Missouri-Columbia moved to mainland China in 2003 and was an executive at JLL in both Shanghai and Tianjin before setting up his own firm in Tianjin in 2019 and joining AmCham China last year. “We have to keep the commercial end of this up, and we need to continue to trade,” given China’s size and global importance, he said.

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“One of the things that has kept the Chinese at the table with the U.S. is that they understand trade is critical,” Hart said. Both the U.S. and other countries acted during Covid as “a barometer of what’s going on the economy, and were constantly telling the Chinese government that the system was squeezing business and squeezing the economy,” he said. That kind of partnering with other foreign companies in China is crucial to future success for the U.S. in the country, Hart added.

To that end, American companies on the Washington visit encouraged officials to rebuild mechanisms for U.S.-China communication, whether at the government, think-tank or individual level. “You guys need to get back to China, you need to talk to China more, and you need to go visit China,” Hart told D.C. leaders. “You can’t sit on the side and comment about something that you haven’t seen in three years and is probably no longer what you think. We also encouraged the restart of people to people exchanges.”

“My great fear for the U.S.-China relationship is: Who will be the next generation of America’s China scholars? We just don’t have many students here and we need U.S. students to be coming to China,” Hart said. A shorter-term problem is that flights between the two countries are below pre-pandemic levels and ticket prices are higher. “We need more flights,” he said.

Recent Chinese crackdowns against U.S. business involved in due diligence are “small, but very concerning,” Hart said. “There’s just not enough transparency around why these companies have been investigated. It does appear anecdotally that these companies are involved in due diligence and information collecting to consulting.” (See related post here.) Bain, Mintz and Capvision have reportedly been targets.

“Our message back to anybody that will listen to us in the Chinese government is if you want foreign investment, or if you want companies to continue to operate successfully, they need to do due diligence on potential investment partners or investment projects,” Hart said. “Economic information and competitive information are critical for business. You can’t say you want foreign investment and block information. Those two things don’t go together.”

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@rflannerychina