Interview with Amy Celico on U.S.-China Relations

Amy Celico is a Principal of Albright Stonebridge Group (ASG) and leads the firm’s China team. Prior to joining the firm, Ms. Celico served as Senior Director for China Affairs at the Office of the U.S. Trade Representative where she was responsible for developing and negotiating positions on issues related to China’s non-financial services sectors and intellectual property rights. In July 2020, Amy Celico attended the USCET-AmCham online webinar Voting Your Pocketbook: Economics, Trade, and Business Implications for US Presidential Elections and delivered her speech about US election and US-China relations. Yunan Wang, a student journalist at US-China Perception Monitor, recently held a Zoom interview with Ms. Celico. They discussed the latest developments on US-China relations.

Yunan Wang: You stated regarding the USCET-AmCham forum that bilateral trade between US and China acts as a catalyst of instability instead of an important stabilizer. However, it seems that conflicts between the two countries right now go far beyond trade imbalances. Could you explain how you reached this conclusion?

Amy Celico: When I referred to the US-China trade issues as a catalyst for the larger problems in the relationship, I was talking about the past few years. But right now, I would say that trade issues have, once again, acted as the stabilizer, especially with the Phase-One Trade Agreement.

When I worked for the US government at our consulate in Shanghai, my work focused on the premise that China joining the WTO was beneficial to the US economy, and for both countries, China’s accession to the WTO would increase bilateral trade and opportunities for investment. Back then, US-China trade and commercial ties were really the ballast and the stabilizing force in the relationship even though there were areas of disagreement.

During the Obama administration, we began to increasingly see more problems in the trade relationship and we started to talk about other issues like climate change and international cooperation on transnational issues or global health pandemics. At the time, these topics had served as the stabilizers. On the other hand, the US business community was increasingly frustrated by the lack of progress made on intellectual property enforcement and forced technology transfer. When President Trump claimed that he was going to act differently on these issues within the trade relationship, he started to apply tariffs on Chinese imports into the United States which, in my opinion, was a catalyst for us. For both countries, the US-China trade war became a worrisome problem.

Ironically, US-China trade relations are being seen as a stabilizer today as we start to talk about problems in a whole host of other areas. In the past few months, the Phase-One Trade Agreement in January is the last pleasant news that we heard. I am glad that despite other disputes, we still have some topics on which we can talk about the benefits of continued, close US-China relations. Specifically, trade relations have been and should continue to be one of those things that is truly, mutually beneficial.

Yunan Wang: Even though progress has been made on the Phase-One Agreement, which is indeed beneficial to both countries, it seems as though the US and China continue to be locked in an escalating confrontation, and companies from both countries might find it increasingly difficult to operate with their foreign business counterparts. As a senior executive at Albright Stonebridge, how has your work helped those companies?

Amy Celico: First, the Phase-One Trade Agreement was significant for the business community. All my clients were happy to see the agreement being announced and being committed to because it helped take some of the tensions out of the commercial relationship that had become extremely contentious between the US and China.

However, as you said in the question, it did not address all of the problems. Even though the Phase-One Agreement was announced and committed to, there should always be a “Phase-Two Agreement,” and that agreement should not solely focus on the American problems. When we are continuing to discuss more of the longstanding challenges between the two countries, we should also talk about issues of forced technology transfer or the use of subsidies to unfairly compete on the global stage as well as in the Chinese market. Between any two countries, reciprocity and openness are the significant issues in the bilateral trade relations. We still have a long way to go.

In this 2020 Covid-19 pandemic environment, the way that Albright Stonebridge Group is trying to help our clients is ensuring that the Chinese government is aware of the positive impact of foreign investment in the country right now. Our clients want to be in China, and they will want to be participating in the Chinese market. More than ever, it is important to highlight the fact that foreign investment helps to rebuild the economy after the devastating impact of the Covid-19 health crisis. We definitely don’t think that the Phase-One Agreement solved all the problems, although we have clients in different fields, like our agricultural clients, that were happy about the agreement made by the Chinese government. I don’t want to diminish the importance of that agreement, but I have to highlight that it is a very limited one. Therefore, we need to build off of that.

Yunan Wang: You mentioned the negative impact of the Covid-19 health crisis for the two countries and the world, so could you tell me, in your observation, how has the Covid-19 pandemic impacted the bilateral relationship between the US-China?

Amy Celico: It is not a happy topic, right? The impact of Covid-19 across the world is so significant on human life, on our emotion, on our economic as well as our day-to-day welfare. We’re feeling that here in the United States as well, where there are fewer and fewer economic opportunities because the economy is in recession. I don’t want to ignore the political impact of Covid-19, especially on the US-China relationship, because it has taken a significant cost in some ways as it is being politized. We have to admit that the Covid-19 crisis has been seen as exacerbating tensions between two countries because of the origins of the pandemic and its economic costs.

I think that economically, the Covid-19 crisis has clarified for many countries that global supply chains being so dispersed can be difficult in times of economic and public safety need. Questions are being raised about whether we should bring some of our global production of certain commodities back, or nearer, to our home countries. This is why we are talking about nearshoring today. What we have seen from the Covid-19 pandemic is the disruption in necessary trade flows that might concern domestic needs for some goods like Personal Protective Equipment (PPE).

They might not be for economic reasons, but for other reasons. Some countries might wonder if they should diversify their supply chains so they are not so dependent on China, for example, or on any one region. This global health pandemic has unveiled the vulnerabilities of these global supply chains as they currently operate. For my clients, they are making economic decisions while facing some pressure from their home governments. Therefore, they are starting to consider nearshoring. At the same time, they are trying to be responsive to the real human costs of needing to have access to medical supplies during times of emergency. It is a very complicated issue. I should conclude that one of the lessons of Covid-19 is that while we only looked at the dollars and the cents in trade issues before, we are starting to think about these other factors. It has been quite disruptive for a lot of global multinational companies thinking about this, including our clients.

Yunan Wang: Do you think that the politicization of the Covid-19 pandemic, especially the demonization of China, is partly due to the current US presidential election? Can we expect that US-China relations will improve after November whether or not Trump or Biden wins the election?

Amy Celico: You know very well how politicized the environment becomes in the United States during presidential election campaigns. This year is no exception. In fact, I would suggest that this year would probably be worse than ever because the incumbent President Trump is facing a significantly difficult challenge in getting re-elected. Why? Because our economy is in trouble. Economic performance is the most accurate indicator for US presidential elections, as in the past, Americans usually make a bet on a president and re-elect the incumbent more often than not; if a first-term president does not get re-elected, there is typically an overriding reason.

President Trump is facing headwinds because of Covid-19. When we are talking about the US economy and the Covid-19 crisis, China is closely tied to both issues. Inevitably, President Trump and his team will be tying China to both issues — Covid-19 and the US economy. In this campaign season, there is more rhetoric about China. China has been formed as “the enemy” to the strong US economy. I have to say this year, President Trump has focused more on the challenges with China than he did four years ago, especially because of the Covid-19 crisis and our economic recession. And I think Vice President Biden, as he was part of the Obama administration, also has to focus on the challenges in the US relationship with China and how he could deal with things differently than President Trump has over the past three and a half years.

In my opinion, China has been and should be a central issue in our election because it is now a global superpower and a country with which the US disagrees on many issues. And unfortunately, over the years, we have seen a proliferation of those issues. Usually, Americans care more about domestic issues like economic recession or welfare policies than foreign policies; however, President Trump has very tightly tied both our economic recession and Covid-19 problems with China. The Pew Research Center, as I quote, records that Americans have a more negative view of China now than ever before. This perception does trickle down from how our president negatively talks about the role of China in the US economy. I think this is a leading reason why China is a central issue in our election and why China is being used as a tactic in our politics.

Yunan Wang: It is quite natural and logical that people care more about domestic policies during presidential elections, but do you think Americans buy the election tactic of tying China to domestic issues in a negative light? Do you think that Americans in general have objective or comprehensive knowledge of China? On the other hand, as you have stayed and worked in Shanghai for more than seven years, in your opinion, do average Chinese know the United States well?

Amy Celico: It is a very hard question to answer. I will say, just from my experience, when I first started studying Chinese history and Chinse language in the mid-1980s, people around me had a very low level of understanding about China. I still remember reading The New York Times every day as an undergraduate and being excited when there was a little section or a story about China in the paper. And obviously, today there is a story about China in every section of the paper every day, whether it is cultural, political or economic. It has been amazing to watch just how important China is to every issue for the United States. Because of China’s changing role in the world, there is more awareness about China. Speaking of Chinese citizens, when I lived in China years ago, I do believe that Chinese people whom I met in Beijing, Shanghai or Jiangsu had awareness about the United States. However, it was a basic level of understanding. In my opinion, many citizens in the United States have caught up with Chinese citizens and have a basic awareness about one another, because China is now important, just like the United States was twenty years ago.

It is more about awareness rather than understanding. Unfortunately, I think that for both Americans and Chinese citizens, we get a lot of negative and biased news about one another in our media. Talking about understanding one another is harder because of this whole host of information. Some of it is legitimate, but some of it is overblown. We are receiving so much negative information about one another and consequently, it is harder to have a true appreciation for one another. I believe that this is a fundamental challenge for many of us who focus on US-China relations. Indeed, there are many problems and issues that are real, significant and worrisome; if we are going to characterize the relationship in a competitive way, I think it is totally fine. But if we are going to characterize the relationship through distrust and enmity, we are going to poison the relationship in many ways.

Therefore, I am extremely worried about the trend here in the United States, and I think in China, too. Today, traditional media and social media have been full of extremely negative reporting about the intentions of one towards the other in a damaging way. I feel that some of us have to stand up and remind our citizens here in the United States, and I believe that in China it should be the same. It is my responsibility to remind us of the importance and the value of this relationship, even though it is competitive and tough.

We just cannot say that China is our enemy, but sadly we are going to.

Yunan Wang: I hope that your opinion will be heard by many Chinese, especially by my generation, because here in China today, there are many young people who hold hostile attitudes towards the United States. For example, when the US consulate in Chengdu was shut down, there were voices celebrating this “historical moment.” This is indeed a worrisome issue today.

Amy Celico: It is. It is certainly a responsibility of people in China, just like it is mine here to say that we should not celebrate the deterioration of the relationship. Now, we do disagree on many things, but there is nothing to celebrate and it is dangerous. It is bad for people in both countries. It makes me nervous when Americans and Chinese seem to welcome the hostility in the relationship.

Yunan Wang: Hong Kong is another important issue in US-China relations, and it is also controversial. In your opinion, how did the US business community react to the implementation of the national security law?

Amy Celico:  I think the Hong Kong issue does underscore that some of the challenges that we are talking about today in US-China relations are an outgrowth of real concern toward some Chinese policies. This is not about politics or propaganda but rather real issues in the relationship. The business community is waiting to see how the law is implemented before they can actually form a judgement on what impact it is going to have on their business. Could Hong Kong continue to be a global center of finance and a promising regional hub for all commercial activities if, for example, the Internet was censored, or there were more restrictions on the ability of Hong Kong citizens or foreign residents to operate on the ground? As you might say, some of that is going to be due to US government policies, but most of it is due to Chinese government policies. The US business community and US government are looking to see whether and how the law will be implemented and how the Hong Kong Legislative Council election will go forward.

Indeed, we are hearing from the Hong Kong government and Beijing that this national security law was put in place to stabilize the environment so that economic activities could continue stably in Hong Kong. Businesses rely on stability to operate, but it is not the only concern for the foreign business community. We are also looking to see if we can conduct business in the same way that we did before and to see if there will be restrictions on data flows and if information security can be guaranteed. They are waiting to see if they should rethink their presence in Hong Kong. In conclusion, I think that this is indeed worrisome for the business community and for the international community watching the Chinese government’s actions in Hong Kong, but we don’t want to prejudge what the implications of those actions are until we can actually see how this impacts Hong Kong society, its economic performance, and the ability to continue to operate in this important regional hub.