US Commerce Secretary Gina Raimondo urges American businesses to keep investing in China (Analysis)

Hong Kong CNN

US Commerce Secretary Gina Raimondo encouraged American businesses to continue investing in China Wednesday, despite the fact that some US firms had called China's second largest economy 'uninvestable'.

The secretary of state encouraged businesses to expand in China at an event organized by the American Chamber of Commerce in Shanghai.

Raimondo's message to executives was to keep doing what they are already doing.

Her comments highlight the tension in the relationship. This was made clear on Tuesday when she rejected a Beijing request to relax US export and investments controls despite exchanging many warm words with senior Chinese officials over three days of meeting in Beijing and Shanghai.

Raimondo, a Reuters reporter, said that US companies had told them they thought China was 'uninvestable'. This is especially true after a recent crackdown against American consulting and due diligence agencies.

Raimondo spoke at AmCham Shanghai, thanking companies for their commitment to the Chinese market. Aly Song/AP

She said at a Wednesday press conference that 'US businesses need to see action taken on these issues or they will consider it too risky, and uninvestable'.

Wang Wenbin responded, saying that China remains an important investment destination in the world.

He referred back to a statement made by the premier of the country, Li Qiang. In it, he said that China hoped that the United States will take'real actions' to maintain bilateral relations.

Raimondo’s tour, which concludes on Wednesday, follows visits by three key Biden administration official, including Secretary Antony Blinken and Treasury Secretary Janet Yellen, in their efforts to stabilize US ties the second largest economy.

Eric Zheng of AmCham Shanghai told CNN that after Raimondo appeared, he hadn't heard the phrase 'uninvestable.'

He said: 'Given the events of last year, with Covid, and all disruptions and now that we are still dealing with macro geopolitical conflicts, there's a lot uncertainty.' There's no doubt that the confidence of companies is low.

He added that'most members still see China as an important market to them, one they consider strategic.' To be globally competitive they must be present in this market, despite the challenges.

Warm Words

Raimondo, the US Commerce Secretary, is the first US official to visit China since 2005. She has spent the week, like other US Cabinet members, trying to restore communication between her Chinese counterparts.

According to the US Commerce Department, one of the measures that was agreed on Monday was to create a two-way working group for the discussion of issues related to trade and investments. The group will meet twice per year.

The chiefs of commerce have agreed to meet personally at least once per year.

Raimondo hugging a girl during a tour of Shanghai Disneyland. Andy Wong/AP

Wang Wentao is the China's Commerce Secretary. He said that Raimondo's previous comments in favor of trade with China were appreciated. Wang Wentao also stated that he would be willing to work together to "foster an environment more favorable for policy."

Raimondo, in several meetings with the Premier and Vice Premier He Lifeng during which they met, repeatedly stressed the importance of their relationship, describing the $700 billion dollar economic relationship as 'one the most significant relationships in the world'.

Even odds

However, a deep divide remains.

Raimondo, as Yellen did in July, tried to convince Chinese officials the United States didn't want to separate from China.

Raimondo said to officials in a Tuesday speech: 'We will, of course never compromise on protecting our national safety, but I want to make it clear that we are not seeking to decouple the economy or hold China back.

In response to Raimondo’s comments, Chinese officials repeatedly were asked if their country was "uninvestable". Little progress was made in resolving thorny issues of trade.

Reuters reports that Raimondo stated Tuesday that she rejected a Beijing request to relax US export controls for technology and to reverse an executive order restricting US investment in Chinese firms that could be involved in the development of military weapons.

CNN's request for confirmation was not immediately responded to by the US Department of Commerce.

Need for a 'predictable environment'

Raimondo told reporters she also raised raids against US companies during her discussions.

The Chinese counter-spy law and the crackdown on foreign consulting firms on grounds of national safety have caused concern amongst foreign businesspeople.

Raimondo stated that 'US companies want to do business in Canada, but need a predictable regulatory climate'.

Raimondo met with Shanghai Party Secretary Chen Jining on Wednesday in Shanghai. Andy Wong/AP

This issue shows the fine line that the Commerce Secretary is walking.

The Commerce Department believes it can achieve both objectives, which are to promote US exports to China and to implement measures to protect US interests through export controls. This was stated by Nazak Nikahtar, former assistant secretary of industry and analysis at the Department of Commerce during the Trump administration.

She said that this may work for 'like-minded' countries but not China. "China has made it clear on numerous occasions its desire to overthrow the United States," she stated.

China has rejected this notion. In recent months, China has accused the United States for politicizing economic matters.

Zheng of AmCham Shanghai said that he saw this visit as "just the first steps" in the process of repairing the economic relationship.

He said that if you asked our members what their top concern is, they would say the bilateral relationship, or the uncertainty.

It will take some time to overcome other obstacles. We're being realistic, I believe.

This report was contributed by Jadyn Stambaugh and Alex Stambaugh, both of CNN's Beijing Bureau.