As growth stalls for the U.S. and China, Blinken talked up economic ties in high-stakes Beijing trip

BEIJING — Secretary of State Antony Blinken underscored the importance of the economic aspects of the bilateral U.S.-China relationship during his high-stakes trip to Beijing earlier this week.

In a press conference Monday that wrapped up his visit, Blinken noted record high trade between the two countries, and said the U.S. is “prepared to cooperate with China” in “macroeconomic stability,” among other areas of mutual interest.

Earlier that day, he met with U.S. businesses in China working in health care, automotive and entertainment, the State Department said. The head of U.S. foreign policy meeting with businesses can’t be considered a given on trips of this nature.

“I know particularly when Blinken was [scheduled to be] coming before in February, we lobbied and we were told there was no time for the business community,” Michael Hart, president of the American Chamber of Commerce in China, told CNBC.

Hart said he didn’t know what may have changed since then, but noted similar attention to business when German Foreign Minister Annalena Baerbock visited Beijing in April.

“That would suggest the politicians do very much understand the economic linkages and the importance for political stability between those two economies,” Hart said. “It’s significant.”

The German Chamber of Commerce in China said that during her Beijing trip, Baerbock visited German company Flender, a gearbox manufacturer.

Chairman Colm Rafferty and Vice Chair Roberta Lipson attended the meeting with Blinken on behalf of AmCham China. The U.S. Department of State referred CNBC to Blinken’s press conference Monday when asked about AmCham China’s comment about failing to get a meeting with the secretary during his planned February trip.

Blinken met Chinese President Xi Jinping Monday as part of his trip to Beijing, the first visit by a U.S. secretary of State since 2018.

Gabriel Wildau, managing director at consulting firm Teneo, said the most important economic takeaway from Blinken’s trip was that it happened, especially the meeting with Xi.

“The big fear for investors has been that bilateral relations are on an unstoppable downward spiral,” he said. “Just by signaling that relations may stop getting worse, the two sides can reduce pressure on companies to explore options for decoupling.”

Blinken also met with Director of the Chinese Communist Party’s Central Foreign Affairs Office Wang Yi, and State Councilor and Foreign Minister Qin Gang.

U.S.-China tensions escalated under the Trump administration. It had focused on using tariffs and sanctions in an attempt to address long-standing complaints about the inability for U.S. companies to access the Chinese market in the same way as local firms.

Blinken told reporters at Monday’s press conference that he heard about the problems for U.S. companies in China, and the companies’ desire to grow their local business. He described doing business in China as being in the best interests of the U.S.

Regulatory challenges aside, a more pressing issue for businesses is slower economic growth in China and the U.S. in the last few months.

The U.S. Federal Reserve has aggressively hiked interest rates in a bid to stem inflation domestically. China’s central bank this month started trimming major interest rates to support growth.

Treasury Secretary Yellen is among the U.S. officials expected to visit Beijing in the near future.

Global macroeconomic stability is one of the items the two countries should work together on, U.S. President Joe Biden said at his meeting with Xi in November, according to a readout. 

On Monday, Blinken listed out similar areas of potential cooperation, including climate and the economy.

He said the growth of major economies such as China is in the U.S. interest and described the economic relationship as “vitally important.”

“But at the same time, as I said, it’s not in our interest to provide technology to China that could be used against us,” he said. 

The Biden administration has used sanctions and export controls to restrict the ability of U.S. businesses to work with Chinese partners on advanced technology such as high-end semiconductors.

On the issue of Taiwan, Blinken also brought up the economic angle. He noted that a crisis over the island would likely “produce an economic crisis that could affect, quite literally, the entire world.”

He pointed out that 50% of commercial container traffic goes through the Taiwan Strait every day, and that 70% of semiconductors are manufactured on the island.

Blinken said he made it “very clear” to the Chinese about rising concerns surrounding Beijing’s recent “provocative actions” — and the “dramatic consequences” for the world if a crisis around Taiwan escalated.

Beijing claims Taiwan is part of its territory, and has maintained it seeks “peaceful reunification” with the democratically self-governed island. The U.S. recognizes Beijing as the sole government of China but maintains unofficial relations with Taiwan.

Blinken said a fundamental U.S. understanding is that any differences on Taiwan “will be resolved peacefully.” He reiterated that the U.S. does not support Taiwan’s independence.