21 Aug China Investment and Competition State-of-Play
In today’s political landscape, it is challenging to find areas of agreement between parties, where each side not only wants the same outcome, but can also agree on a strategy on how to get there. One area that bucks this trend is China. In fact, US-China relations, at a high level, may be one area where the transition between the Trump and Biden Administration was actually quite steady, largely because the changes were negligible. The sanctions policies were left in place, the commitment to Taiwan has been maintained, and key officials rarely leave any question of their skepticism of China’s intentions. With this US-China relations continue to deteriorate as we navigate the 2024 election cycle.
In 2023 alone, we have seen frequent action related to China, which will continue heading into an election year given the easy political optics and bipartisan opportunities it currently represents. Key examples have included the creation of the Select Committee on the Chinese Communist Party in the House with significant bipartisan support, outbound investment provisions included in the Senate’s NDAA on a 92-6 vote while others were simultaneously proposed by the Administration, and countless other proposals addressing common concerns related to China. We will cover all of these latest actions, as well as a review of other recent legislative and administrative actions impacting US-China relations and identify some key themes we believe will persist no matter which party occupies the White House or controls Congress come 2025.
This deterioration in US-China relations has also had a real impact on how companies operate and navigate the global economy. Just this month, the Department of Commerce (Commerce) reported that imports from China fell 25 percent during the first half of 2023. This has largely been viewed as an effort to de-risk and diversify supply chains. US companies are experiencing increased scrutiny of their ties to China, whether it be in the form of investments, supply chains, partnerships, and more, while politicians are emboldened by the limited political risk that comes with anti-China rhetoric.
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