China Market Intelligence

Today, USCBC submitted comments to the Bureau of Industry Security (BIS) at the Department of Commerce regarding proposed rules on military, military support, intelligence, and foreign security end users. USCBC is supportive of efforts to protect national security, but the Council is concerned that these rules will harm trade in many non-sensitive sectors and potentially result in commercial decoupling with China.

At a tech conference last month, Minister of Industry and Information Technology (MIIT) Jin Zhuanglong praised the advancement of China’s domestically-developed software, AI, and associated technologies. He promised to expand government support for the ecosystem as part of China’s xinchuang—or innovation technology application innovation (ITAI)—initiative.

US and Chinese officials convened in early September in Tianjin, China for the second US-China Commercial Issues Working Group (CIWG), marking another step in the iterative process of addressing commercial concerns between the two countries.

As tariffs and other trade restrictions between the United States and China continue to rise, US policymakers are flagging a related trend: an increased manufacturing presence of Chinese firms in third countries—particularly in Mexico and Vietnam. Some accuse these firms of deliberate “country hopping” to skirt US tariffs on imports from China and enter the US market at lower tariff rates.

Beijing has taken the first step toward fixing its economic problem—admitting it has one. China’s growth has continued to stagnate this year as it grapples with a protracted real estate downturn, local government debt, and record youth unemployment, which have all resulted in an acute crisis of confidence.

Accessing China’s vast public procurement market continues to be difficult for US companies. Procurement issues appeared in this year’s list of top 10 challenges for USCBC members for only the third time in our survey’s history.

Six months after China’s internet regulator published new rules on data flows, cross-border data transfer (CBDT) remains a top challenge for US companies operating in the country. Sector-specific issues and the introduction of free-trade zone CBDT rules are presenting new challenges to companies even as national-level compliance burdens have eased.

The impending presidential and congressional transition in the United States is prompting American policymakers to push for final approval on long-debated tariff policies, in part in an effort to win voters. The initiatives in question—the final Section 301 determination, new de minimis rule, and ongoing debate over China’s trade status with the United States—are all in different stages but stem from similar motives.

US-China trade continued to decline in the first half of 2024, reaching 2.3 percent year-over-year after both US exports to and imports from China contracted. That said, this is the slowest contraction in overall US-China trade since the second half of 2022.

China is hoping to replicate Silicon Valley-style innovation through its policy support for small- and medium-sized enterprises (SMEs). Several initiatives released this past summer by government ministries provide investment incentives and low-cost financing for qualified domestic companies that innovate new technologies.