The recent frosty consultations between senior Chinese and U.S. officials in Anchorage brought into stark relief the scale of the challenges that must be navigated within this crucial bilateral relationship. These challenges resonate strongly here in Washington, for no state is more on the front line, or has more at stake, in U.S.-China relations.
The erosion in U.S.-China relations has had a punishing effect on our state’s economy. In 2020, Washington state exports to China were just $3.5 billion, down from $14.6 billion (adjusted for inflation) in 2018. Non-aerospace exports fell more than 27% in real terms in 2019 before rebounding 15% in 2020. Most notably, export sales of aircraft to China fell from an average of $11.7 billion per year (adjusted for inflation) in the years 2014-2018 to zero in 2019.
Many of the issues raised by the Trump administration, from weak intellectual property enforcement to unfair trade practices, were longstanding and legitimate concerns among the business community. But the approach, including tariffs and a go-it-alone strategy, was incoherent, haphazard and ineffective.
The Biden administration needs a fresh approach to meet the challenges of an ever more aggressive China. While maintaining the Trump tariffs in the near term, the new administration recognizes that the previous policy single-handedly confronting China was a failure that made little progress on China’s market interventions and burdened U.S. consumers with higher prices from tariffs. Biden’s team must rapidly rebuild a coalition of allies to push back against China’s aggressiveness and align international institutions on the actions and reforms China must take. Coupled with efforts to further level the playing field for U.S. companies doing business with China are steps that the administration must take which will directly improve Washington communities and businesses by improving American industry’s global competitiveness.
Members of the Washington State China Relations Council, and the Washington business community more broadly, have constructive ideas for how U.S. policy toward China should be shaped. The council has consulted with a wide range of organizations across many sectors of our state’s economy. Five core themes rise to the top of policy recommendations members and businesses would like federal, state and local governments to implement. While these policies are national in scope, we believe they’ll show positive returns in Washington state.
First, remove barriers that impede America’s trade with China. The new administration must exert constructive pressure, as a country and with its allies to call out China for its mercantilist trade policies and overzealous protection and manipulation of its home market in favor of Chinese companies. This includes reviewing and eliminating tariffs imposed under the Trump administration — particularly those proven to harm American businesses and households — significantly strengthening intellectual property protections and enforcement and eliminating non-tariff and regulatory trade barriers to Washington goods and services in China. We must have true reciprocity where U.S., UK, EU, and Canadian companies, for example, have the exact same access and operating rights that China enjoys in these open markets — making clear to Beijing what is at risk if reform is not rapid and comprehensive.
Second, strengthen U.S. visa policies to encourage the best and brightest to pursue education, research and investment opportunities in Washington state. Chinese students, researchers, professionals and visitors contribute enormously to our state’s economic competitiveness and the rich cultural fabric of our communities.
Third, strengthen domestic infrastructure and investment — at both the federal and state levels — to improve our global competitiveness. This includes critical transportation, broadband and digital infrastructure, as well as investment in state and local economic development initiatives that play a pivotal role in building and sustaining Washington’s labor competitiveness and our trade and investment relationship with China.
Fourth, seek constructive new areas for cooperation with China, focused on shared interests. Climate change should be priority No. 1. President Xi Jinping has made bold commitments for China to quickly reach peak carbon emissions and carbon neutrality, aided by investments in clean energy. The Biden administration’s creation of a climate czar signals a similar commitment to address one of the world’s most pressing issues, and we are encouraged that these bilateral discussions will progress following the Anchorage meeting. Collaboration on climate change is not a choice, it’s a necessity, and will present real opportunities for Washington businesses.
Finally, we must recognize that that the issue of human rights, as manifest by our divergent viewpoints regarding Hong Kong and Xinjiang, and sensitive issues in the areas of military or economic coercion could, if not managed with a balance of strategy and force, derail the global economy. The reality is that the U.S., with its allies, together with China, are the dominant foundations of the global economy of this century, and it would be irresponsible if issues in these areas force economic disengagement. In addition to necessary domestic resilience of critical supply chains, our national security also requires full competition and economic engagement with China in all markets. This is the essential difference from the Cold War approach to the Soviet Union.
Washington state has the opportunity to model a way forward in advocating and implementing policies that advance the kind of constructive, competitive U.S.-China relationship that our communities and businesses want to see. Our global competitiveness requires economic access and engagement with China, its markets and human talent. We would be irresponsible if we pursued policies that forced either country to wholly disengage commercially from the global economy.
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