On September 19, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Transportation, the Development Research Center of the State Council, and the Zhejiang Provincial People’s Government jointly held the International Forum on Resilient and Stable Industrial and Supply Chains.
At the Forum, AmCham China Chairman Colm Rafferty delivered virtual remarks and AmCham Vice Chair Gloria Xu attended in-person. Read on for a full transcript of Rafferty’s speech from the event.
Good afternoon. I’m Colm Rafferty, Chairman of the American Chamber of Commerce in China. I would like to thank the organizing ministries and Zhejiang province for hosting this event. I appreciate this timely opportunity to speak at the International Forum on Resilient and Stable Industrial and Supply Chains and to share observations and thoughts from our business community on the promotion of international industrial cooperation.
History and Background
It is a critical moment for us to have the chance to share perspectives on ways to strengthen the resilience of global supply chains and promote international industrial cooperation. Before sharing my observations and thoughts, please allow me to briefly introduce AmCham China.
The American Chamber of Commerce in China (AmCham China) was founded in Beijing over 100 years ago, as a non-profit non-governmental organization representing American business in China. Today, we have nearly 1,000 member companies, who collectively have millions of employees throughout China.
AmCham China has long been an advocate for a stable and balanced US- China trade relationship, and we seek to be a bridge for constructive commercial engagement between both countries. The US-China relationship has a direct and profound impact on global peace and prosperity, and our member companies believe that American business in China benefits both the United States and Chinese economies.
The Chamber’s mission is to help American companies succeed in China through advocacy, information, networking, and business support services. In addition to our headquarters here in Beijing, we have Chapters in Tianjin, Shenyang, Dalian, and Wuhan and are also active in other parts of the country. Across these 5 offices, AmCham China has more than 30 working groups, and organizes more than 150 events each year.
Emphasizing our Impact
Each year, AmCham China has countless meetings with senior Chinese government officials. We also have regular dialogue with senior members of the US administration in Washington. As such, we truly believe we are a commercial bridge between the two countries, especially during these challenging times when there is less government-to-government dialogue.
As an example, our annual Government Appreciation Dinner – during which Vice Premier Hu Chunhua delivered a keynote speech in 2019 – brings together 600 guests, of which roughly 130 are Chinese government officials, plus another 50 from the US Embassy in Beijing. For many years, we have been a critical and trusted partner for both sides in this bilateral relationship. In the past month alone, our Chamber met with both Chinese Ambassador Qin Gang in Washington DC and also with US Ambassador Burns here in China to share perspectives on topics impacting the US business community in China.
Decoupling
In March this year, AmCham China launched the 24th annual edition of the China Business Climate Survey Report, one of the key barometers of the sentiment of the American business community in China. That report included some key themes:
- China remains a top market priority for nearly two thirds of our members, and for some member companies they believe it is important to remain competitive in the China market in order to remain competitive globally.
- Our member companies believe that a decoupling of the US and China economies is in neither country’s economic interest.
- While our member companies respect the need of both countries to define and defend their legitimate national security interests, we urge that such considerations be defined as narrowly as possible, so that regular trade, commercial activities, and innovation can flourish.
Supply Chain
Supply chain issues and related concerns are not new for our member companies, but the pandemic has presented the most serious challenge yet to supply chain stability. Disruptions to supply chains and business operations started in 2018 as bilateral tensions rose, and have since worsened due to pandemic related restrictions. Additionally, the reorganization of global supply chains and business operations has become more political, with pressure to “take a side” from factions in both the US and China, with the Chinese government and the US government being major sources of this pressure, according to our most recent annual membership survey.
Since the beginning of 2020, pandemic-related uncertainty has become the key challenge that virtually all businesses are facing. In a recent flash survey of our membership, 57% of respondents reported that the COVID-19 outbreaks and related restrictions had disrupted supply chains due to disruptions to transportation and shipping networks. Among manufacturers, 86% reported that their supply chains had been disrupted, a reality that has been prompting companies to rethink their global strategies.
Despite all the challenges, however, China remains a top investment destination and our member companies plan to stay put in China for the long term. Specifically, in our most recent survey, 83% of member companies say they are not considering relocating manufacturing or sourcing outside of China, a number that has remained consistent from the start of the pandemic.
Advocacy
Over the past decades, China has been an attractive investment destination for our member companies, due to the strength of its economy and clarity around long-term development goals. The Chinese government has emphasized its high-level commitment to continuously optimizing the business environment. Today, pandemic-related uncertainties remain a top business challenge for our member companies here in China. The current travel restrictions imposed on businesses have led to a more segmented global economic landscape, something that harms both our member companies as well as the healthy development of the Chinese economy.
For multinational companies to commit significant investment to China, a stable and qualified workforce, on-the-ground visits from overseas colleagues, visas for family members of key expatriate employees, and stable supply chains are absolutely essential. Furthermore, for nearly 3 years, our member companies have been unable to get their senior global business leaders into China, which is important to continuously build relationships and trust. In addition, 77% of respondents to our most recent survey cited the uncertainty around the length of quarantine and lockdowns as the primary reasons for foreign employees choosing to exit or refusing to relocate to China. In response, AmCham China has been advocating publicly for a more streamlined process of inbound flight quarantine and further easing of the cross-border travel requirements, to help with strengthening people-to-people exchanges, and the benefit that brings to both economies.
Some helpful progress has been made on this over the summer, and we appreciate the government’s support on that, but much more effort is needed, because, frankly speaking, the base of reference for our member companies is everywhere outside China that has already re-opened their borders and relaxed COVID protocols. AmCham China will continue to urge the government to seek a more optimal balance between pandemic prevention, economic development, and opening up of the country.
As an example, I spent the past 6 weeks traveling for meetings in Europe and the United States. I flew to 7 separate destinations, without ANY restrictions in any of those countries or cities. However, in order to return to Beijing, I needed to spend 17 days in hotel room quarantines, without ANY predictability.
In China, we look forward to a more streamlined process of quarantine and an easing of the travel requirements, so that our businesses can travel to and invest in China as they have done in the past.
White Paper
Each year, AmCham China also releases the American Business in China White Paper to comprehensively assess the business environment in China, to provide constructive recommendations to the Chinese and US governments, and to promote bilateral economic and trade relations. The White Paper is written by our member companies and provides an accurate and nuanced view of their experiences on the ground in China. At a national level, White Paper delivery meetings have become a regular communication mechanism between our two governments and the business community. At a local level, regular visits between the Chamber and local governments to discuss the White Paper, not only helps to nurture mutual understanding but also provides an opportunity to share policy recommendations that are intended to be constructive and helpful in improving the business environment.
Policy Priorities
In terms of offering solutions and promoting concrete international industrial cooperation, we have three main policy priorities.
First, we encourage action-based engagement between the US and China to create substantive and mutually beneficial initiatives and solutions on an issue-by-issue basis rather than unproductive values-based positioning. We urge both sides to commit to real plans for commercial and political engagement, and we encourage both governments to prioritize bilateral communication at the working level, with strong and constructive business community engagement.
Second, we would like to see more clear and evenhanded policy and regulatory implementation. To that end, we recommend an increased focus on policy communication and clear enforcement guidelines by both the Chinese and US governments, more consultation with multinational companies when proposing key industrial regulation changes, while allowing companies sufficient time to implement necessary changes, and focused and clear guidance issued from China’s central government to ensure that regional differences in enforcement or implementation timelines do not cause unnecessary disruptions for companies with a large presence in China. Representing nearly a thousand member companies in China, AmCham China is willing and keen to work closely with partners from both the government and business sectors to facilitate such exchanges.
Third, we aim to enrich cooperation and exchange in areas of global and bilateral importance. We urge the US and China to adhere to globally accepted trading rules, support and strengthen the existing multilateral trade regime, and avoid protectionist tendencies in an effort to strengthen global businesses’ supply chains resilience. Both sides should separate issues of national security and identify guardrails to guide bilateral relationship in other spheres, minimizing restrictions on innovation where possible. On supply chain innovation, we recommend governments and businesses to exchange ideas and best practices to make the global supply chains greener and more digital, for which more globally aligned decarbonization and digital standards and policies are essential.
Finally, we urge the US and China to engage in dialogue not just on trade and economic issues, but also start or intensify negotiations on areas of national security, law enforcement, military and other spheres of the bilateral relationship, with a goal to seek alignment and improve coordination across each of these spheres, so that regular trade and business activities can flourish.
At AmCham China, we will continue to regularly engage with both governments, acting as a constructive and supportive economic bridge between the two sides in many areas, including the development of resilient supply chains.
In Conclusion
Resilient and stable industrial and supply chains are critical for multinational companies to operate. AmCham China looks forward to a deepening of international industrial cooperation necessary for US businesses operating in China. American companies have played an integral part in China’s economic rise in a way that has benefited both the US and Chinese economies. AmCham China has been here for more than 100 years, and we fully intend to be here for 100 more. We believe that open and predictable markets are the best environment to foster greater success and stronger ties between China and the international business community. Conversations, like the ones held here today, can help to provide the business community with a roadmap to improve the current business environment, so that our businesses can continue to invest and constructively contribute to China’s economic development. Thank you.