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U.S. ambassador to China says America needs a level playing field for business

STEVE INSKEEP, HOST:

A photo opportunity in Beijing today illustrates something about our changing world. Russia's visiting President Vladimir Putin stood with China's President Xi Jinping. China has done more and more business with Russia since Russia's invasion of Ukraine. The United States has been trying to isolate Russia and this week also added even more tariffs on products from China. Nicholas Burns is watching the way these two nations collaborate. He is the U.S. ambassador to China. He came to the phone early this morning, Beijing time. And I asked him about a number that we reported on this program yesterday.

Charles Maynes, our Moscow correspondent, reports that Vladimir Putin and China's Xi Jinping have now met 43 times. What do you think that number shows?

NICHOLAS BURNS: I think it shows a very close strategic and tactical relationship between the two leaders, obviously, and between the two countries. And of course, the United States wants very much to see China reduce its support for Russia in the Ukraine War. When Secretary Blinken was here a couple of weeks ago, he made a very strong point that Chinese companies have been extending material support, mineral support, technology support that supports the Russian defense-industrial base. And so for us, that's a very important issue. The U.S. sanctioned 31 Chinese companies last week because of their support for the Russian war effort.

And the point, Steve, that we've been making here to the Chinese leadership is that China can't have it both ways. It wants to have a good relationship with the European Union and the United States, and yet it's supporting the country, Russia, the leader of Vladimir Putin, that has brought about this great crisis in Europe over the Ukraine War.

INSKEEP: We have thought about this here in the United States in terms of Russia being the problem and getting help from China. I wonder if there's a great risk of this flipping around the other way, that at some point, Russia, which would seem to be the smaller and in some ways weaker country at this point, is becoming a satellite of China that in the long term may be turned to China's uses.

BURNS: Well, certainly, we've seen a much closer political and strategic relationship since the beginning of the Ukraine war, between Beijing and Moscow. We've seen a vast expansion in economic ties between the two. We've seen China run interference for Russia. China is the bigger economy, obviously. China is the larger global power than Russia. But the Chinese, I think, have not realized sufficiently that their actions have turned the European Union against them. And you've seen this furious reaction by the Europeans to the fact that China - on an issue that is existential for the Europeans, Russia's invasion of Ukraine, that China proclaims neutrality and yet doesn't act in a neutral way. I think that's the core of the problem, and that's become a major issue in our relationship between the United States and China.

INSKEEP: What are you hearing these days from the American business community that is still trying to do business in China?

BURNS: What I'm hearing very consistently is that there's not a level playing field, that there's massive subsidies given by the government in Beijing, but also by provincial governments to Chinese competitors of American companies and that there's nowhere close to a level playing field for American companies here in China. And that's why President Biden really had no choice but to impose the tariffs earlier this week, just to give American companies a fair chance to compete here.

INSKEEP: Of course, Americans are trying to sell things in China at the same time that these tariffs are imposed on goods that are shipped from China to the United States. What response or retaliation are American businesses expecting after President Biden increased these tariffs?

BURNS: Well, we'll have to see what the Chinese decide to do. But I think they have to be careful here. They brought this problem on themselves, and it's not just with the United States. You've seen the European Union now considering its own tariffs on solar panels from China, on EVs from China. You've seen a similar reaction from Mexico and Brazil.

The larger problem, is one of overcapacity, meaning China is now producing here in China two to three times the amount of products that it needs, whether it's in lithium batteries, whether it's in solar panels, whether it's in electric vehicles, and China has put a major emphasis on those three industries, and they're exporting those products to the rest of the world at artificially low prices, dumping the products on foreign markets, designed to kill the competition and secure a market share. So I do think the Chinese have to be careful in their response because they have ignited a firestorm of criticism, not just from the United States, but from other countries as well.

INSKEEP: Ambassador, I don't want to make you into an economist, but I assume you have some who give you estimates and give you a good sense of the Chinese economy and where it's headed. We have noted the Chinese economy is not growing the way that it has in the past. When we were visiting there, we heard lots of people who were downcast about economic prospects. What do you foresee in China's economy in the next year or two?

BURNS: There's no question they're going through an economic transformation here. The model that produced this extraordinary economic expansion over the last 40 years, low price labor becoming the manufacturing ground of the world through an export economy, that is changing because, of course, it's now more of a middle income country, and so that transition has to happen. They have to boost domestic consumption to power more of their economic growth.

We have not seen that happen. There's been a tremendous property crisis here. A lot of Chinese citizens have their wealth in their apartments. And yet they overbuilt. There's been a property bust here. They've got to deal with that. If you add over the mid to long term, the fact that there's a demographic crisis, fewer babies born, there's a considerable number of challenges and they're feeling that. And so they very much want to retain Western international investment in their economy.

But there's been a decline in foreign direct investment because companies here - I'll just take the American companies - are hearing two messages from the Chinese leadership. One is, we're open for business, please come, we'll treat you fairly, which doesn't always happen. The other message is from the security side of the government. They've been cracking down on Western consulting firms, on firms that deal with data. As I said before, Steve, most companies are staying, but many are not making new investments because they are not clear which of these messages, we're open for business or the security message, is going to predominate in policymaking over the next couple of years.

INSKEEP: I know, Ambassador, that you are big on people-to-people exchanges, getting American students over to China where possible, Chinese students to the United States, that sort of thing. But right now, the State Department has a Level 3 travel advisory on China, meaning reconsider travel if you're thinking about it. Would you recommend that Americans travel to China?

BURNS: Well, the issue here is that we've had a few Americans detained, we believe wrongfully, and prosecuted here, and we're trying to get them out of jail. That's one reason for the Level 3 travel advisory. The second reason is that some Americans who live here had been subjected to exit bans, many of them involved in civil lawsuits, lawsuits having their businesses. That's objectionable, and we're trying to change that. So for those two reasons, we've put the travel advisory at Level 3. The great majority of Americans who travel here and most notably, students who travel here, we haven't seen those types of problems, but for the business community, it's a different picture.

INSKEEP: Ambassador Nicholas Burns, thanks so much. It's a pleasure talking with you again.

BURNS: Steve, thanks very much. Transcript provided by NPR, Copyright NPR.

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