“From what I understand, there really hasn’t been much of that for this visit,” said William Zarit, the chairman of the American Chamber of Commerce in China, a group that has worked closely with American trade negotiators for decades, “which makes us a bit concerned that there may not be much discussion on the structural issues.”
That has led to grumbling among business types.
Several financial firms were interested in attending the trip to discuss Chinese restrictions on bank ownership, but they decided to pull back when they learned that the Trump administration was focused on making deals rather than pushing for structural reform, said an industry source who is familiar with the negotiations, who declined to be identified while discussing internal deliberations.
Trump administration officials say there has been more preparation on trade issues than meets the eye for the current trip, and they add that they have been laying the groundwork to do more in the coming months. These efforts include an investigation into Chinese infringement of American intellectual property, which could lead the administration to impose tariffs or other significant limits on Chinese goods. They also include an effort to tighten restrictions on Chinese investment in the United States, complemented by congressional legislation that is expected to be introduced soon. There are also investigations into limiting imports of solar panels, steel, aluminum foil and other goods mainly from China that the administration contends are subsidized by the Chinese government.
Those efforts have been proceeding slowly. As a result, the preparatory work for the summit meeting has been led by Commerce Secretary Wilbur Ross, whose agency focuses more on corporate transactions.
Some companies declined to join the trip, afraid of provoking reprisals by the Chinese government or of being perceived as too close to the Trump administration and its controversies. But more than two dozen were planning to attend, including smaller firms like Stine Seed, the solar project developer SolarReserve and the wastewater treatment company Drylet.
Credit Aly Song/Reuters
Critics say these commercial deals will do little to address the bigger economic imbalances between the countries.
“There are a lot of deals in the works,” David Dollar, a senior fellow at the Brookings Institution, said at a conference in Washington on Oct. 31. “They do not reflect a change in policy.”
China has nonetheless been considering opening some narrowly targeted sectors to greater international competition. Beijing ministries have particularly looked at whether to allow greater investment in Chinese service industries. In a briefing Oct. 31, a senior administration official said improving trade competitiveness in services would be one of the White House’s top priorities for the trip. Chinese officials said they were open to that.
“Our manufacturing industries opened up relatively early with relatively wide areas,” said Gao Feng, a Commerce Ministry spokesman. “In contrast, service industries opened up relatively late. We need to expand the opening up of services while we deepen the opening up of manufacturing.”
More American investment in the Chinese service sectors may not do much to help the heavily blue-collar workers in Rust Belt states who helped propel Mr. Trump to the presidency a year ago. These workers have absorbed the brunt of job losses from Chinese competition and technological change.
One service sector that may be ripe for opening is banking. China has begun reviewing how it has hamstrung foreign banks with a long list of regulations that limit the services they can offer and cap their ownership stakes in Chinese banks. Those rules have left foreign banks with a combined market share of just 1.5 percent of the Chinese banking system’s assets.
Guo Shuqing, the chairman of the China Banking Regulatory Commission, said during a news conference on the sidelines of the recent Communist Party congress that he saw room for changes. “We will further open up and give more space to foreign banks in the types of establishments, the credentials of stakeholders, the percentage of stakes they hold, and the range of businesses,” he said.
China has already made it a little easier for international asset managers to operate investment funds in China and allowed big institutions like Citibank to establish toeholds in China’s bond market by granting them narrowly defined trading licenses.
Chinese regulators have their own reason for allowing more foreign competition: forcing their own banks to allocate loans more prudently, and perhaps to resist political pressures to keep lending heavily to state-owned enterprises. Easing restrictions on foreign banks “will help to improve the efficiency of capital allocation in the country,” said Chua Han Teng, a specialist in Chinese financial institutions at BMI Research, a unit of Fitch, the credit ratings firm.
But a separate issue has cropped up this year: China’s ever-tightening cybersecurity rules. These regulations have dimmed considerably the American banking sector’s enthusiasm to start making large investments in China, particularly in commercial banking.
China has issued new rules — although they have been paused because of bitter complaints from bankers — that would require banks to buy most of the telecommunications equipment they use in China from Chinese suppliers and to store their Chinese data in China.
“It’s still very much on the minds of our bankers,” said Kenneth Jarrett, the president of the American Chamber of Commerce in Shanghai. “That is not something they are eager to do.”