A slew of new measures are fundamentally transforming economic relations.
Washington DC – FEBRUARY 15, 2022
In recent years, Washington’s China policies have expanded rapidly into technology sectors such as telecommunications, semiconductors, data security, and financial services. Growing bipartisan concern about Beijing’s actions and intentions have fueled these developments, with little difference between the Trump and Biden administrations or between the White House and Congress.
The result has been a flurry of new restrictions—including on exports, imports, direct investment, and financial securities—that are fundamentally reshaping the U.S.-China economic relationship. Cross-border business travel between the United States and China, essentially halted for the past two years due to the COVID-19 pandemic, is unlikely to fully rebound because of increased caution and suspicion on both sides of the Pacific.
At the same time as this more defensive approach to economic and technology competition with China has taken root, Congress has also gone on the offensive by moving to appropriate new funding to areas deemed critical to maintaining U.S. competitive advantages in technology, manufacturing, and defense. The current depth and breadth of these approaches were hard to imagine just a few years ago. The corporate sector, besides facing increased government action with respect to doing business with China, must also contend with shifting public opinion and increased investor scrutiny—for example, on human rights issues along companies’ supply lines in China. Looking ahead, 2022 promises a continuation of these trends, which will have far-reaching impacts across multiple business sectors.
In just the last three years, Washington has enacted a raft of policy changes and regulation related to economic competition with China. In early 2018, the Trump administration applied and expanded tariffs on Chinese goods in response to Beijing’s unfair practices, including industrial subsidies, forced technology transfer, and state-sponsored intellectual property theft. Leveraging new laws passed in 2018, Washington expanded the use of export controls in defense technology, imposed stricter vetting of foreign investments in strategic U.S. industries, and restricted the procurement of equipment and services from five Chinese information technology companies, the most prominent of which was Huawei.