The BGA China Team led by Senior Advisor Haiying Yuan, wrote an update to clients on the recently held meeting between Taiwan President Tsai Ing-wen and U.S. Speaker of the House Kevin McCarthy in California and the impact of the meeting on China-US relations.

Context

  • Chinese authorities will conduct exercises and ship inspections in the Taiwan Strait in response to the meeting between Taiwan President Tsai Ing-wen and U.S. Speaker of the House Kevin McCarthy in California on April 5. Many were expecting a far more severe reaction from Beijing following the second such meeting between a U.S. speaker of the House and Taiwan’s president in less than eight months.
  • China calls Tsai’s transit through the United States and congressional delegations to Taiwan a “provocation,” even though U.S. officials have stressed that Tsai’s transit did not break established precedent or signal a change in U.S. policy. This is Tsai’s seventh such trip to the United States as Taiwan’s top leader.

Significance

  • The frequent meetings between U.S. congressional and Taiwanese leaders since last year are likely to continue. Regular higher-level contact between the United States and Taiwan will greatly increase the uncertainty around a historically tenuous status quo and raise the potential for conflict between the United States and China over Taiwan.
  • The direction of U.S.-China relations is uncertain because communication between the two nations is at a low point. The recent cancellation of U.S. Secretary of State Antony Blinken’s trip to Beijing was a blow to normalizing government-to-government communication between the two countries.

Implications

  • The Tsai-McCarthy meeting will likely exacerbate the existing complications in U.S.-China trade and business relations. U.S. and Chinese policymakers will now be more motivated to continue pursuing sometimes antagonistic policy agendas in ways that will impact companies’ operations globally.
  • Chinese officials will likely accelerate China’s strategy of putting national security at the center of economic policy, which will continue to complicate the operations of multinationals in China. This strategy includes strengthening China’s self-reliance in many aspects of technology, data, supply chains, energy and food security and diversifying trading partners.

We will continue to keep you updated on developments in China as they occur. If you have any comments or questions, please contact BGA Advisor Eric Wang at ewang@bowergroupasia.com.

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Senior Advisor

Yuan is a well-established voice contributing to business and diplomatic circles in Beijing. Since founding Yuan Associates in 2004, Yuan and his firm have served more than 200 clients and become major players in China’s growing government affairs industry. Yuan has 30 years of experience working with the Chinese government, including senior diplomatic postings. He served in Washington, D.C. as China’s agriculture attaché and in Rome as the alternate representative to the United Nations Food and Agriculture Organization. In Beijing, he directed the Department of International Cooperation at the Ministry of Forestry. After retiring from public service, Yuan worked as ... Read More