End Of ‘Engagement’ Won’t Lead To U.S. Business Exit From China
A commitment by U.S. businesses to China’s market isn’t likely to be reversed after a high-level warning that relations between the two countries had entered new territory following an extended period of geopolitical tension, a former long-time American diplomat in Greater China said in an interview.
“The majority of U.S. companies are successful in China and see that success as an important contributor to their global performance,” Kenneth Jarrett, currently a senior advisor to the Albright Stonebridge Group, said. “They are not looking to exit the China market.”
Kurt Campbell, the White House’s top leader on Asia policy, sounded a cautious note on ties between the two countries in an online discussion organized by Stanford University on May 26. “The period that was broadly described as engagement” with China, Campbell said, “has come to an end.”
“The dominant paradigm is going to be competition,” Campbell said. “Our goal is to make that a stable, peaceful competition.”
That nevertheless leaves room for cooperation between the two sides, said Jarrett, whose earlier posts also include president of the U.S. Chamber of Commerce in Shanghai and Greater China Chairman APCO Worldwide.
“It’s important to understand that even within an overall dynamic of competition, there is still room for cooperation,” Jarrett said. “Commercial interaction between the United States and China is one form of beneficial cooperation. That is how U.S. companies see their activity in China and I don’t expect that perspective to change.
In an annual White Paper earlier this year, the American Chamber of Commerce in China said “China is a priority market for over two-thirds of our members, and our surveys indicate that nearly 85% are not considering relocating manufacturing or sourcing.”
“While we are likely to see continued restrictions in some areas of advanced and emerging technology, most U.S. commercial activity in China will continue as before,” Jarrett noted.
U.S. businesses are attracted to China in part by its economic growth. After contracting by 6.8% in the first quarter of last year during the peak impact of the pandemic, China’s GDP was one of the few to expand for all 2020, gaining 2.3% for the full year. It grew by 18.3% from a year earlier in the first quarter of 2021, one of the best-ever performances by an economy that now stands as the world’s second-largest.
U.S. companies with a substantial presence in China include Starbucks, Apple and Tesla.
Jarrett will be speaking at the 2021 U.S.-China Business Forum, an online discussion organized by Forbes China, on August 27.