U.S.-China relations will affect businesses in 2024
U.S.-China relations will affect U.S. businesses in 2024, whether it's through more export controls or building alliances with other countries on technology.
With the prospect of tighter U.S. export controls on China in 2024, business leaders might continue reevaluating their relations with the country. This shift comes as the U.S. bolsters its own manufacturing economy and strengthens alliances in critical areas such as semiconductor technology.
President Joe Biden's administration implemented export controls in October 2022 limiting the sale of advanced semiconductor and artificial intelligence technologies to China. It followed that in August 2023 with expanded restrictions on U.S. investments in AI, quantum information technologies, semiconductors and microelectronics in China. The government also stopped shipments to China of advanced AI chips designed by chip companies such as Nvidia to slow China's advancement in technologies including AI.
Robert Atkinson, founder and president of the Information Technology and Innovation Foundation (ITIF), expects the White House to expand export controls on advanced technologies in the year ahead.
"There's a reasonable chance they're probably going to do something with regards to cloud computing and IT services," Atkinson said.
As the White House continues looking for ways to bolster U.S. competitiveness with China through measures like export controls, it is also building alliances and relations with other countries on emerging technologies to further that goal.
U.S.-China relations in 2024
Competing with China remains a priority for the Biden administration, said Nicholas Burns, U.S. ambassador to China, during a discussion at the Brookings Institution last week. The export controls already implemented signal competitive actions the U.S. has taken over the last couple of years to restrict the advanced technology supply to China.
"It's not just the commercial rivalry, if you think about the development of AI, machine learning, biotechnology and quantum mathematics," he said. "It's the fact that many of those technologies will be militarized into a new generation of military technology, and we don't plan to be the No. 2 in that technology battle in the future."
Biden has laid out a plan for competing with China beyond export controls, which includes investing in the U.S. workforce and manufacturing through legislation such as the Chips and Science Act of 2022 and the Inflation Reduction Act.
Burns said the administration will continue building a working economic relationship with China. However, he added that the U.S. is furthering alliances with other countries in East Asia, such as Japan and South Korea, on emerging technologies. The U.S. has also bolstered its relationships with India and the Philippines, he said.
"Biden has set out a clear policy: invest, align and compete," Burns said. "The align part is critical to the U.S."
Indeed, ITIF's Atkinson said that in a stick-versus-carrot scenario with U.S. businesses in China, he expects the Biden administration to offer more incentives to U.S. businesses rather than hard measures forcing them to move to other places. He said the U.S. has been working closely with India on manufacturing semiconductors, for example.
"There will continue to be encouragement for American companies to be less dependent on China," Atkinson said. "But I don't think there will be big sticks on that."
U.S.-China relations affecting U.S. businesses
Two-thirds of U.S. businesses will reassess and redistribute their global tech operations amid growing geopolitical pressures such as the U.S.-China tensions, according to a Forrester Research 2024 predictions report. Apple, for example, has already doubled its total U.S. manufacturing efforts since 2021 as a result of increased restrictions on China, according to the report.
Folks are much more attuned to the challenges that are presented when working with China.
Matthew GuariniAnalyst, Forrester Research
China's policies have also affected U.S. businesses. The country retaliated in response to the U.S. export controls by banning chip manufacturer Micron Technology and imposing sanctions on U.S. defense contractors Lockheed Martin and RTX.
U.S. businesses will continue to reassess operations in China as a result of the continued tensions between the U.S. and China, said Forrester analyst Matthew Guarini, one of the authors of the predictions report.
"Folks are much more attuned to the challenges that are presented when working with China," he said.
In addition, there is "no level playing field" for U.S. businesses in China, Burns said.
"Intellectual property rights violations, forced technology transfer and massive subsidies -- not just from the government in Beijing, but from provincial governments in China -- to Chinese companies therefore put their American rivals at a distinct disadvantage," he said.
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
