Biden’s Commerce Chief Walks a Tightrope in China
What to watch as Raimondo visits China
Commerce Secretary Gina Raimondo, one of the Biden administration’s biggest Beijing hawks, kicked off her visit to China on Monday with a call to preserve a “stable economic relationship” between the two economic powers that “share over $700 billion of trade.”
With relations between the countries at a critical juncture, Ms. Raimondo is now the fourth senior U.S. official to travel to China in less than three months. Her visit, which will include meetings with business leaders and government officials, including her Chinese counterpart, Wang Wentao, will be closely watched as she looks for common ground on trade, even as she seeks to curtail it.
Here is what Ms. Raimondo expects to focus on during her trip, according to The Times’s Ana Swanson, Alan Rappeport and Keith Bradsher.
Ms. Raimondo is likely to defend the escalating tech war, which she will argue is meant to protect U.S. national security. (Ms. Raimondo said on Monday that she would neither compromise nor negotiate on that point.) The White House this month announced plans to bar private equity and venture capital firms from making investments in China in quantum computing and advanced semiconductors.
Last year, the administration imposed significant limits on shipping advanced semiconductors and chip-making machinery to China. And a new bipartisan law aimed at strengthening the U.S. semiconductor industry bars companies that accept federal money from making high-tech investments in that country.
Western businesses have to contend with China’s national security laws, too. In March, the Chinese authorities detained five Chinese nationals working in Beijing for the Mintz Group, an American consulting company. And in April, the authorities questioned employees in the Shanghai office of Bain & Company, the U.S. management consulting firm.
“This worry about physical security is really putting a damper on interactions at the commercial as well as the academic level,” Susan Shirk, a research professor at the 21st Century China Center at the University of California, San Diego, told The Times.
Ms. Raimondo will seek to keep trade channels open. China remains America’s third-largest export market, buying more than $150 billion worth of products from U.S. farms and businesses. U.S. export controls affect only 1 percent of bilateral trade between the countries.
One key goal for the trip is promoting commercial ties where they align with U.S. interests, including efforts to foster tourism and “people-to-people exchanges.” A return to 2019 levels of Chinese visitors in the United States would generate $30 billion for the American economy.
China’s economic slowdown is a huge concern for global investors. The country’s struggles to bounce back from the pandemic, as well as a growing housing crisis, have raised questions about the fate of its immense economy.
Hours ahead of Raimondo’s meeting today with Mr. Wang, the Chinese authorities cut stamp levies on stock trades in an effort to boost trading volumes — but also introduced a measure to slow the pace of I.P.O.s. Chinese stocks initially rallied at Monday’s market open, but lost most of those gains during the day.
HERE’S WHAT’S HAPPENING
Two storms threaten to batter the East Coast. Franklin became a major hurricane on Monday, potentially causing life-threatening rip currents and swells in the eastern United States. Idalia is forecast to become a Category 2 hurricane by the time it hits Florida tomorrow, possibly leading to evacuations along its path.
3M is reportedly near a $5.5 billion settlement over faulty earplugs. The company is negotiating an agreement that would resolve more than 300,000 claims by military veterans that its earplugs failed to stop hearing loss, according to Bloomberg. A settlement would resolve one of 3M’s costly legal headaches, though it still faces thousands of lawsuits over so-called forever chemicals.
The fate of the Wagner Group is in limbo. Moscow confirmed that Yevgeny Prigozhin, the leader of the Russian paramilitary group who led an aborted mutiny in June, died in a plane crash last week. That makes the future of the once-feared military force — which operates in at least 10 countries and has valuable business properties in Africa — unclear, though it may be absorbed into the Russian armed forces.
Allies back away from Spain’s soccer federation chief amid a misconduct scandal. After FIFA suspended Luis Rubiales amid an investigation into whether he forcibly kissed a Spanish player after the nation’s World Cup win, corporate sponsors have backed away from him, too. That leaves Rubiales increasingly isolated, even as he refuses to resign while contending that the kiss was consensual.
A quietly broad majority for corporate diversity
The gathering in Washington over the weekend to commemorate the 60th anniversary of the March on Washington underscored the gap between what Martin Luther King called for at the event and reality.
But a new survey by the Harris Poll for the Black Economic Alliance Foundation suggests that at the very least there is broad support among Americans for increasing racial diversity in the business world.
Most Americans believe diversity is desirable and profitable, according to the survey of more than 2,000 adults, stretching across racial, generational and political lines. About 78 percent of respondents said they believed corporations should reflect the U.S.’s racial makeup, and they support businesses taking “active steps” to ensure diversity.
A majority also believes that diversity improves businesses’ ability to innovate, understand and reach customers, hire and retain talent, manage risk, and make money.
But many Americans are also unaware of racial realities. Just one in 10 respondents correctly guessed that fewer than 2 percent of the country’s 500 biggest companies — eight, to be precise — have a Black C.E.O. (On average, respondents said that the figure was 19 percent.)
When told the actual number, 71 percent of respondents said that it wasn’t sufficient.
Still, many efforts to improve diversity in the workplace face headwinds. About two-thirds of Republicans surveyed said they supported corporate inclusion goals; that response suggests that “partisan efforts to dismantle corporate diversity programs are actually out of step with the mainstream of the country,” the foundation said.
But conservative policymakers and courts have pushed back against diversity programs in the business world. Republican presidential contenders like the anti-woke activist Vivek Ramaswamy and Gov. Ron DeSantis of Florida, who banned D.E.I. initiatives in his state’s public colleges, are staking their campaigns on dismantling programs aiming for more equality.
That suggests that businesses face a difficult path in improving diversity, even if most Americans support such moves.
The employment phrase du jour
On earnings calls over the past year, a new phrase has increasingly emerged from the lips of corporate chiefs: “reassignment.”
That is, employers have been reshuffling teams to adapt to a potential economic downturn or pullback by customers. As a result, some workers are being told that their roles have been eliminated. They aren’t being fired necessarily — but their jobs are in limbo.
The Wall Street Journal calls the phenomenon “quiet cutting.” It’s the latest omen, ahead of Friday’s jobs report, of a softening labor market. It’s also a sign of how far we’ve come from the “quiet quitting” days of just a few years ago, when plentiful job opportunities gave workers the upper hand in negotiating with employers. The Journal explains:
Adidas, Adobe, IBM and Salesforce, among others, have reassigned employees as part of corporate restructurings. Mentions of reassignment, or similar terms, during company earnings calls more than tripled between last August and this month, according to data from AlphaSense, a financial-research platform.
“Reassigning is definitely a huge part of the dynamic right now,” said Andy Challenger, senior vice president at Challenger, Gray & Christmas, an outplacement firm.
“What’s unsafe isn’t always clear. Without a specific heat standard, it makes it more challenging for regulators to decide, ‘OK, this employer’s breaking the law or not.’ ”
— Juanita Constible, a senior advocate from the National Resources Defense Council, on how, after a summer of record-breaking temperatures, workers in many states lack protections from the debilitating effects of extreme heat on the job.
The week ahead
Jobs, inflation and a smattering of earnings are on deck this week as weary investors look for signs of hope amid a monthlong market swoon. Here’s what to watch.
Tuesday: The Conference Board will release a key reading on consumer confidence. Also, Best Buy and HP report results.
Wednesday: Germany, which reported last week that its economy had flatlined last quarter, is scheduled to publish inflation data for August. CrowdStrike and Salesforce deliver earnings.
Thursday: Investors will pore over the eurozone’s August consumer price index reading and new Chinese manufacturing data. Elsewhere, Dollar General, Dell and UBS announce results.
Friday: It’s jobs day. Economists are forecasting that employers added roughly 175,000 jobs in August, which would be a drop-off from July. Expect a focus on wage data as well.
THE SPEED READ
Shares in China Evergrande, the highly indebted property developer, plunged as much as 87 percent today as trading resumed following a 17-month pause. (CNBC)
The Chinese electric vehicle giant BYD agreed to buy the China mobile electronics manufacturing operations of Jabil for $2.2 billion. (Reuters)
Instacart’s recent I.P.O. filing showed that the grocery delivery service is offsetting a slowdown in its core business with a jump in advertising revenue. (Bloomberg)
Loopholes in a $10,000 cap on deductions for state and local taxes add up to $20 billion in lost revenue for the federal government, according to a new estimate. (WSJ)
Terry Gou, the founder of the electronics giant Foxconn, said he would run for Taiwan’s presidency. (Bloomberg)
Labor groups and their allies plan to put pressure on Hyundai and the White House over the nonunion carmaker’s transition to electric vehicle production. (NYT)
Best of the rest
“Covid Closed the Nation’s Schools. Cleaner Air Can Keep Them Open.” (NYT)
The Upper East Side is one of New York City’s wealthiest neighborhoods — and, thanks to its high adoption of weight-loss drugs like Ozempic, one of its thinnest. (NYT)
A who’s who of Silicon Valley is behind an $800 million effort to build a new California city. (NYT)
France will spend 200 million euros ($216 million) to help wine growers destroy excess grapes to help prop up wine prices. (FT)
“Barbie” is poised to become the highest-grossing global release in Warner Bros. history. (Variety)
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Andrew Ross Sorkin is a columnist and the founder and editor at large of DealBook. He is a co-anchor of CNBC’s “Squawk Box” and the author of “Too Big to Fail.” He is also a co-creator of the Showtime drama series “Billions.” More about Andrew Ross Sorkin
Bernhard Warner joined the The Times in 2022 as a senior editor for DealBook. Previously he was a senior writer and editor at Fortune focusing on business, the economy and the markets. More about Bernhard Warner
Sarah Kessler is a senior staff editor for DealBook and the author of “Gigged,” a book about workers in the gig economy. More about Sarah Kessler
Michael de la Merced joined The Times as a reporter in 2006, covering Wall Street and finance. Among his main coverage areas are mergers and acquisitions, bankruptcies and the private equity industry. More about Michael J. de la Merced
Lauren Hirsch joined The Times from CNBC in 2020, covering deals and the biggest stories on Wall Street. More about Lauren Hirsch
Ephrat Livni reports from Washington on the intersection of business and policy for DealBook. Previously, she was a senior reporter at Quartz, covering law and politics, and has practiced law in the public and private sectors. More about Ephrat Livni
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