When Hong Kong was returned to China by the United Kingdom in 1997, it was supposed to maintain its independent social, legal, and economic systems until at least 2047. This served as the basis for the United States-Hong Kong Policy Act passed in 1992, which upholds that the United States continue to treat Hong Kong separately from the mainland for trade, export controls, and other purposes, unless the president determines through an executive order that Hong Kong is no longer sufficiently...
China Market Intelligence
China’s push for civil-military integration (CMI) has intensified US concerns that cooperation with China on dual-use technologies will aid China’s military modernization efforts to the detriment of US national security. CMI has risen to a new level of importance under President Xi Jinping, who elevated it to a national strategy in March 2015 and established a high-level Party policymaking body to centralize leadership of CMI in January 2017.
A recent State Council notice that calls for deepening reforms across the Chinese bureaucracy—“Fang Guan Fu” reforms for short—outlines Chinese government plans to improve its business environment.
While China continues to be a priority market for most of the companies surveyed in the US-China Business Council’s (USCBC) forthcoming 2019 Member Survey, market optimism is moderating. In addition, the deteriorating bilateral relationship and concerns about competing on a level playing field are measurably impacting American companies operating in the China market.
Earlier this month, USCBC submitted comments on the draft Administrative Measures for Lists of Parties with Seriously Illegal and Dishonest Acts via the Ministry of Justice’s online portal. Published by the State Administration for Market Regulation (SAMR), the draft measures aim to establish a new blacklist tied to China’s ever-expanding Social Credit System (SCS).
Brunswick Group conducted a survey to assess the impact of US-China trade tensions on consumers in the United States and China. As a result of the trade war, Brunswick finds that Chinese consumers are changing their spending habits to avoid buying American products and US companies are seen as less favorable.
On Monday, August 5, the Treasury Department officially labeled China a currency manipulator. Though frequently threatened in political election cycles, this is the first time the designation has been imposed since China, South Korea, and Taiwan were cited in 1994 by the Clinton administration. The designation is mostly symbolic, as many of the actions taken by the Trump administration to date, such as implementation of tariffs, go beyond the remediation actions enumerated in US law.
In July of last year, several arms of China's government released the first in a series of documents detailing the country’s latest national crime reduction campaign, encouraging stronger enforcement of existing laws and regulations. While several similar initiatives have occurred in the past, many US companies and risk management experts note that consistent rule-of-law type enforcement is the new normal.
On July 20, China announced 11 opening measures for its financial services industry. While they have been portrayed in the media as game-changing, very few of the openings are in sectors that US financial services companies are interested in. For those measures in sectors of interest, the reforms could lead to real openings only if China removes the underlying regulations and requirements that ultimately act as barriers to entry.
To understand how American companies are dealing with challenges presented by China’s data regime, the US-China Business Council conducted a month-long series of interviews with multinational enterprises across the automotive, financial, pharmaceutical, ICT, and service industries to learn how they are responding to cross-border data flow, data localization, and data security issues.