Main topic: Chinese startups could miss American know-how and intangible benefits due to restrictions on U.S. venture capital flowing to China.
Key points:
1. President Biden signed an executive order to block American dollars from funding Chinese companies developing AI, semiconductor, and quantum computing technologies with military applications.
2. The proposed regulations would also restrict Chinese startups' access to intangible benefits offered by U.S. tech giants and venture capital firms, such as managerial assistance and access to talent networks.
3. While the restrictions may impact Chinese startups' access to American expertise, some investors believe that China's investment ecosystem has been attracting investors from other countries who can provide similar benefits.
China's weak economy, including an unstable property market and weak consumer demand, is posing risks to global markets and economies like the US, according to experts.
An economic crisis in China is unlikely to have a major impact on the US due to limited exposure in terms of investments and trade, and it may even benefit the US by lowering inflation, according to economist Paul Krugman.
China's economic weakness may pose challenges for developing economies and regions that rely on it, but the US economy is well positioned to navigate these headwinds with its investments and resources, according to US Deputy Treasury Secretary Wally Adeyemo.
China's economic policy is being driven by ideology, with leaders hesitant to provide stimulus to the economy out of fear of "welfarism," according to Western experts.
China's economic slowdown is causing alarm across the world, as it is expected to have a negative impact on global economic growth, leading to reduced imports and trade, falling commodity prices, a deflationary effect on global goods prices, and a decline in tourism and luxury spending.
A potential economic downturn in China may have implications for other countries, but the impact on the United States is expected to be minor due to limited exposure to China's economy.
China's economy is experiencing a structural slowdown and becoming increasingly opaque, making it difficult for outsiders to understand the true state of the country's economic affairs, as President Xi Jinping prioritizes ideology over economic growth and transparency.
Even as the United States tries to reduce its reliance on Chinese goods, research suggests that global supply chains remain deeply interconnected, with Chinese products making their way into America through other countries. Changes in trade relationships and supply chains have caused China's share of US imports to decline, but countries like Vietnam and Mexico have seen an increase in imports from China, indicating that Chinese firms are still heavily involved in the supply chains. This reshuffling of supply chains has led to higher prices for goods and calls into question whether the US has truly lessened its dependence on China.
China defends its business practices and claims that most U.S. firms want to stay, despite Commerce Secretary Gina Raimondo stating that China has become "uninvestible" due to fines, raids, and other actions that make it risky to do business there.
US companies are becoming increasingly hesitant to invest in China due to concerns over new anti-spying laws, competition from state-funded firms, and the country's economic challenges such as deflation and a property crisis.
China recognizes its economic problems and wants to improve communication and attract foreign investment, showing a shift from its usual anti-Washington rhetoric.
US companies with significant revenue exposure to China are at risk due to the country's struggling economy, characterized by high youth unemployment rates and recent property defaults, according to Bank of America.
Vice President Kamala Harris emphasizes that managing the US-China relationship involves de-risking and understanding rather than decoupling, emphasizing the need to protect American interests and lead in setting the rules of the road.
China's economic problems are more likely to impact its neighboring countries and Europe than the United States, according to U.S. Deputy Treasury Secretary Wally Adeyemo, who emphasized the need for China to address its structural economic issues.
China's government is downplaying its economic crisis by promoting positive narratives, while social media campaigns and state-run newspapers attack Western media outlets for biased reporting; however, reports suggest that the property sector downturn is causing significant ramifications, and growth projections for China have been downgraded by major banks.
A retreat of funds from Chinese stocks and bonds is diminishing China's global market influence and accelerating its decoupling from the rest of the world, due to economic concerns, tensions with the West, and a property market crisis.
Pessimism among U.S. businesses operating in China is on the rise, with a record low percentage of firms optimistic about their five-year outlook, according to a survey by the American Chamber of Commerce in Shanghai, driven by concerns over geopolitics and a slowing economy.
The outlook of U.S. companies on China's markets in the next five years has hit a record low due to factors such as political tensions, tariffs, slow Covid recovery, and issues in the real estate market; however, complete decoupling between the two economies is unlikely.
U.S. companies are losing confidence in China and some are limiting their investments due to tensions between the two countries and China's economic slowdown.
US companies' optimism about their business prospects in China is at a record low, with US-China tensions and negative effects on businesses being the biggest challenges, according to a survey by the US-China Business Council. Despite the low optimism, China remains a top-five priority market for 74% of companies surveyed.
China's President Xi Jinping emphasizes the need for reform and opening up the economy as foreign investors consider leaving, calling for a greater opening up of free-trade zones and a focus on playing by international trade rules. Despite these efforts, China's foreign direct investment has fallen and US businesses remain skeptical due to regulatory uncertainties and geopolitical risks.
China's foreign policy is often misunderstood by the west, as it is not a grand scheme for world leadership, China deals with democracies, has a role in the world order, draws on its historical experience, and offers appealing aid packages to developing countries.
Liza Tobin argues that it is not China's economic growth that poses a risk to US national security, but rather its zero-sum tactics to achieve that growth, and therefore the US should target China's tactics and not its growth. On the other hand, Pavneet Singh believes that China's strategic intent to surpass the US as the world's economic and technological superpower presents significant risks, and the US must significantly increase its investment and coordination to compete with China. Cameron F. Kerry emphasizes the need for a measured response to China's growth and warns against a strategy aimed at keeping China down, while Mary E. Lovely argues that seeking to limit China's growth weakens the US and that the US should focus on targeted responses to harmful Chinese practices.
