Arthur J. Villasanta – Fourth Estate Contributor
Beijing, China (4E) – China has stopped accepting applications for operating licenses sought by American business firms in the financial services and other industries until “the U.S.-China relationship improves and stabilizes.”
This move by Beijing triggered by Trump’s trade war was revealed by the U.S.-China Business Council (USCBC), a group that represents some 200 American companies doing business with China.
The license ban applies to financial sectors China promised to open to foreign competitors, said Jacob Parker, USCBC vice president for China operations. Chinese authorities earlier on pledged to increase foreign access to closed investment areas such as banking, securities, insurance and asset management.
Parker said Cabinet-level Chinese officials told USCBC China will suspend accepting applications “until the trajectory of the U.S.-China relationship improves and stabilizes.”
Parker noted that in their meetings with the USCBC, Chinese officials showed a willingness to buy more American exports but showed no appetite at all to discuss industry reform, technology policy or other U.S. priorities.
The negotiated outcome refers to U.S. demands that China suspend its Made in China 2025 strategy that calls for the state to lead in developing global champions in robotics, artificial intelligence and other technologies. The U.S. also wants China to reduce the privileges of state-owned companies (SOEs) and eliminate requirements for foreign companies to hand over technology to Chinese partners.
China’s ban is the first public confirmation of fears by American firms their operations in China or access to its markets will be disrupted by the Trump administration’s insistence on punishsing China for its theft of American intellectual prooerty.
Analysts say this move was prompted by China’s running out of American imports to slap import duties on in response to Trump’s tariff hikes. The Chinese indicated only one solution to this ban.
Parker said China wants an end to Trump’s trade war and its crippling tariff hikes, and a negotiated settlement to this conflict.
Beijing retaliated for Trump’s earlier tariff increase on $50 billion of imports but is running out of American goods to tax due to their lopsided trade balance. China bought American goods worth about $1 for every $3 of goods it exported to the United States.
Trump will raise duties on $200 billion of Chinese goods while China will tax $60 billion in American exports for retaliation. China will “definitely take countermeasures” if the tariff hike goes ahead, said foreign ministry spokesman, Geng Shuang.
American economists have warned China might later target service industries such as engineering or logistics, where the United States runs a trade surplus with China. Beijing might also use its multitrillion-dollar holdings of U.S. government debt as a weapon to win the trade war with Trump. In June, China threatened to impose unspecified “comprehensive measures” against the U.S.
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