Takeaways from the 2022 White Paper Launch

On May 17, AmCham China launched the 24^th edition of the American Business in China White Paper (White Paper) which lays out in detail a number of policy recommendations – both cross-sector and industry-specific – for the Chinese and US governments.

This year’s edition weighs in at around 600 pages and contains 38 chapters covering developments over the past year, includes 20 chapters on industry-specific issues, such as agriculture, banking, ICT, manufacturing, healthcare, and real estate; 12 chapters on industrial policy and market access, such as competition law, compliance, procurement, and taxes; and four chapters with a region-specific focus, covering central China, northeast China, Shanghai, and Tianjin.

Also on May 17, AmCham China hosted a virtual launch event to coincide with the release of the White Paper. AmCham China President Michael Hart opened the event with an introduction to the White Paper and its history, and gave an overview of 2022’s key themes.

Key Themes

Ongoing COVID-19 prevention measures have decreased predictability and increased the costs of China operations
A lack of regulatory clarity has undermined business confidence in many sectors
Government-led emphasis on self-reliance is creating additional uncertainty for foreign businesses
Members remain committed to the China market, but many longstanding business challenges remain

Hart wrapped up his remarks by introducing the event’s expert panel: moderator Mattie Bekink, China Director of the Economist Intelligence Corporate Network; Jeffrey Bernstein, Managing Director & Senior Vice President of UPMC China & UPMC International; Sherry Carbary, President of Boeing China; Yong Gao, Vice President at Bayer China; and Lester Ross, Partner at WilmerHale.

For his portion, Jeffrey Bernstein, who also serves as Co-Chair of AmCham China’s Healthcare Committee, said COVID-19 has put China’s healthcare system under stress. He explained that with hospitals focused on pandemic-related issues, many other patients have suffered from a lack of treatment. However, Bernstein said there is a silver lining, predicting that when the pandemic passes, the public will have a more nuanced perspective of what they want in a healthcare provider and, in doing so, create opportunities.

Bernstein additionally focused on data transfer as an area of particular concern for the healthcare industry. Citing challenges due to reciprocal rules and lack of trust between parties, he said sharing data across borders is frequently presumed to be for nefarious reasons when in reality the intent is positive. Bernstein argued that current restrictions on global data are actually harming patients who are unable to access treatments and expertise they wish to seek. He expressed the hope for a “time-out” on frictions when it comes to cross-border data sharing being used to make people healthier and cure diseases.

Yong Gao, who also serves as Co-Chair of AmCham China’s Agriculture Committee, noted that this year’s Business Climate Survey (BCS) Report revealed that 58% of AmCham China members said they expected revenue to decrease in 2022. While Gao noted some of this pessimism can be attributed to COVID-19 controls, he still sees a “mixed bag in the agriculture space.” On the positive end, he says China continues to emphasize food security, poverty alleviation, rural development, and agriculture innovations. Additionally, some member companies are benefiting from the central government’s focus on agricultural sustainability, by receiving subsidies from the Chinese government for agricultural mechanization. However, Gao noted that substantial challenges remain, with one of the largest being that MNCs and domestic players are not on a level playing field. Using the seed industry as an example, Gao said that MNCs are often restricted – and in some cases prohibited – from participating in certain fields. He added that the Agriculture Committee will continue to urge opening up in these fields in order to benefit the entire sector.

Sherry Carbary, who also serves as Co-Chair of AmCham China’s US-China Aviation Cooperation Program (ACP), shared her perspective from the aviation industry. Echoing Gao and Bernstein, Carbary acknowledged the obvious impact of COVID-19 on air travel, but also noted that, with the exception of China, the international aviation industry is on the road to recovery. However, she also emphasized that China remains on track to become the largest aviation market in the world, citing the rapidly growing middle class, urbanization, and continued government investment in transportation infrastructure. Carbary shared that Boeing has forecast the need for 8,700 new commercial airplanes in China over the next 20 years. In the near-term, she said the focus is on leveraging global best practices to increase airport efficiency, increase airspace capacity through sustainable means, and continue to expand general aviation in China.

Carbary also highlighted the importance of the ACP’s work as a public-private partnership with both the CAAC and the FAA, saying that, “For the past 18 years, ACP companies have been able to work closely with the aviation industry here on projects of mutual benefit.” She added that “the ACP has been an important interlocutor in keeping the lines of communication open.”

Lester Ross, who also serves as Chair of AmCham China’s Policy Committee, reflected on the current state of the China market. Ross noted that there has been very little change over the years in regard to the legal services market, where foreign firms are still not welcome. As for the larger state of the China market, Ross said that while it is the world’s largest economy, and rapidly growing, there is increasing concern on the part of foreign companies about uncertainty in the market. That uncertainty, he said, derives from a number of factors including China’s tensions with the US and other countries, plus Russia’s invasion of Ukraine. Ross observed a new buzzword, “friend-shoring”, has emerged to identify the trend of leaning into economic partnerships with allies and friendly countries to increase production of critical products and expand trade. Ross said that the concept of friend-shoring is expect to grow and that US companies will also continue to try to expand and grow their businesses in China, commenting that, “It’s too big to sacrifice.”

Following Ross’ remarks, Bekink added that the trend of rising economic nationalism was apparent even before the pandemic began and US-China tensions escalated. She referred to this rapid slowing down or back tracking of globalization as “slowbalisation.” When asked about areas of possible bilateral cooperation, the panelists agreed that the largest and most apparent are climate change and sustainability, but also added that public health and research presented opportunities for collaboration.

While the event’s panelists represent different sectors, they identified common cross-sector concerns: calls for a more level playing field, data localization and cyber security, and supply chain disruption. Another area of consensus was the role of the White Paper in providing a constructive tool to enhance not only the business community, but promote understanding between the US and China. As Gao commented, “The purpose of the White Paper is not to critique, but to showcase the hard work and sincere suggestions of member companies for the betterment of both countries.” Bernstein added, “The White Paper is recognized around the world, and it serves to chip away at issues of importance, year by year. I am optimistic that with our efforts we can help to provide a more constructive bilateral relationship.” Ross concluded, saying that another fundamental piece to improving the US-China relationship is reinstating people-to-people exchange. Carbary agreed, calling those exchanges “the umbrella that has to be there to support the two countries understanding each other and driving trust.”

All AmCham China members should have received a digital copy of the 2022 American Business in China White Paper, if you have not received yours please email Allison Lapehn at alapehn@amchamchina.org. To join AmCham China, please contact the Membership team at membership@amchamchina.org. To purchase the White Paper directly, please click here.

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Author: Norris Tangen