This year holds some important legislative milestones for the National People’s Congress (NPC)—China’s parliament. Based on what the NPC has said will likely be on its 2020 legislative work plan, key laws governing China’s IP environment, cybersecurity framework, and export control regime will undergo additional review and revision this year. Any changes the NPC makes to these laws could have a significant impact on companies’ near-term operations and long-term perspectives on the China market. You can view the full potential agenda here.

The past few weeks have seen a flurry of announcements of tariff exclusions from the Chinese government. On February 17, China’s State Council Customs Tariff Commission released a list of 696 products currently subject to China’s Section 301 retaliatory tariffs that will be eligible to apply for tariff exclusions (“Phase One” list). A few days later on February 21, China’s Ministry of Finance released a second list of items (Batch II list) eligible for tariff exclusion. While both lists operate on similar timelines, there are differences in the scope of items covered and the application mechanisms, as well as their significance to the bilateral trade relationship writ large. 

There is a general bipartisan consensus on the need to address China’s unfair trade practices, but policymakers approach the “China challenge” from a variety of angles based on the interests of their constituents, the committees on which they sit, and their personal background and aspirations. The following Senate committee leaders are among the most vocal on China:

Newly released data from the US Department of Commerce provides a window into how escalating tariffs by the United States and China on each other’s goods have impacted bilateral trade. Starting in mid-2018, both sides began implementing steep tariffs and by September 2019, tariffs on both sides covered the majority of products traded. As a result, US imports of Chinese goods dropped 16 percent in 2019 to $452 billion after a record year in 2018—a larger decrease than what was seen in 2009 following the global financial crisis. Chinese imports of US goods, likewise, decreased 11 percent, the second year in a row of shrinking imports.

While the number of new confirmed cases of the novel coronavirus, COVID-19, could potentially be declining in China as of today, another wave of new infections in China or elsewhere is not out of the question. As the Chinese government continues with containment measures and businesses across China slowly begin to reopen, it will be important for companies to watch the central- and local-level initiatives outlined below. 

Companies generally agree that the IP commitments included in the Phase One agreement are a step in the right direction. Some industries are more confident than others that the commitments will improve the protection and enforcement of their IP rights in China in a tangible way. The 30-day window of time between the agreement going into effect and the release of China’s IP Action Plan provides an opportunity for industry to raise recommendations to both governments. 

China’s State Council Customs and Tariff Commission released a new list of 696 products subject to China’s Section 301 retaliatory tariffs that will be eligible for tariff exclusions starting March 2, for a period of one year. The list of products covers a significant portion of goods in the expanding trade section of the Phase One agreement, including soybeans, automobiles, aircraft, integrated circuits, oil, and LNG. It also covers goods that made up roughly 50 percent of the United States’ pre-trade war exports to China.