It’s getting harder to navigate U.S.-China competition. We should instead welcome opportunities to talk
Good morning,
It’s refreshing to be on the ground in Hong Kong this week to get some different business perspectives on U.S.-China relations. And there was plenty of news coming out of the China Development Forum in Beijing and the Fortune Innovation Forum in Hong Kong to provide some fodder for the debate.
Faced with lackluster consumer spending and a property crisis, Beijing continues to double down on investing in high-tech and green manufacturing. As the world's largest polluter, emitting about a third of all global greenhouse gases, transitioning to a low-carbon economy in a fair way should be encouraged.
Yet while increased production in electric vehicles and solar energy is welcome, state subsidies are not. U.S. Treasury Secretary Janet Yellen doesn’t like them, nor do many in the private sector. The fear, of course, is that a weak domestic market will encourage China to dump state-subsidized inventory elsewhere, harming foreign competitors. It’s a familiar fear and one that’s dogged China since it was granted entry to the World Trade Organization in 2001. (China has complained to the WTO about subsidies in the U.S. Chips Act and Inflation Reduction Act, too.)
Add in the growing pile of U.S. moves against China—a proposed TikTok ban, sanctions, and fierce criticism of Hong Kong’s new Article 23 security law—and one wonders how Chinese leaders view the competition.
Cathay Pacific CEO Ronald Lam, for one, told Fortune editor-in-chief Alyson Shontell that he welcomes a chance to buy from China’s state-backed Commercial Aircraft Corporation of China—especially in light of Boeing’s challenges. China venture capitalist Kai-Fu Lee believes Chinese AI firms are well positioned to radically narrow the gap with U.S. competitors, in part because of their open-source and more energy-efficient approach. On big-picture challenges like AI, green energy, and promoting human health and longevity, there’s a compelling case for more coordination.
To be sure, it doesn’t help when governments violate human rights and free speech. But let’s welcome opportunities to talk. As former U.S. Treasury Secretary Larry Summers told Fortune executive editor Clay Chandler, the U.S. and China are like “two guys who don’t like each other much, don’t know each other terribly well, and find themselves in a lifeboat that requires two oars, in a very turbulent sea, a long way from the shore.”
Things are much more friendly on the company level, as many multinationals have colleagues in both countries. On the latest episode of Leadership Next, Otis Elevator CEO Judy Marks talks about the 15,000 employees in China who downloaded an app to ring a bell for her on FaceTime to mark its spinoff from United Technologies because the real bell-ringing wasn’t possible during the pandemic. (Check out her full conversation with Fortune CEO Alan Murray here.)
More news below.
Diane Brady
@dianebrady
diane.brady@fortune.com
This story was originally featured on Fortune.com
