Communist Chinese officials have forced the closure of the American Chamber of Commerce in the city of Chengdu. The chamber, which promoted trade between Chengdu and the United States, notified members that it had to cease operations in the name of the “American Chamber of Commerce in Southwest China.” Established in 1996, the organization has over 300 members and operates in Guizhou, Yunnan, Tibet, Chongqing, and Sichuan.
No official reason was provided by authorities as to what prompted the closure. Reuters reported that the Ministry of Civil Affairs (MCA) seemed to be enforcing a rule that only one official chamber of commerce of a foreign nation can exist in the country.
There is already an American Chamber of Commerce in Beijing, which is a business advocacy group with offices in multiple cities. However, the American Chamber of Commerce in Chengdu had no ties with the Beijing office.
Benjamin Wang, the chairman of the Chengdu chamber, stated that he was in discussion with officials regarding the registration of the organization and its future.
A source told the South China Morning Post that the chamber might continue operating under a different name, such as the Chengdu American Chamber of Commerce Business Consulting Co.
The chamber’s WeChat account has adopted this name. Another person revealed to the media outlet that the chamber was operating earlier in a gray area between a wholly foreign-owned enterprise and non-profit, thereby creating a “compliance issue.” But now, the chamber resolved the problem by converting it to a wholly foreign-owned enterprise.
When foreign ministry spokesman Wang Wenbin was questioned at a news conference, he replied that he wasn’t aware of the issue.
A spokesperson from the U.S. State Department asked Chinese authorities to work with the Chengdu chamber and resolve any issues regarding its operations. He added that the department was not aware of any correlation between the chamber’s closure and the shutdown of a U.S. consulate in Chengdu last year.
The Chengdu consulate was closed in retaliation to Washington shutting down a Chinese consulate in Houston a week earlier due to allegations of spying. The spokesperson blamed the communist regime for creating problems for foreign ventures.
“This closure is only the latest example of how the PRC’s opaque, arbitrary regulatory environment is contributing to an investment climate that is increasingly hostile towards foreign businesses,” he said.
Absence of mutual reciprocity
In May, the Beijing-based American Chamber of Commerce released its annual white paper. It stated that American businesses were having a hard time operating in communist China as compared to Chinese companies in the United States. It said that U.S. businesses faced “longstanding structural challenges” in communist China that adversely affected foreign companies.
American companies in communist China have to work with a local partner and are subject to limits on investments. Despite increased pressure on Beijing by the Trump administration, challenges in market access have remained.
“Two-thirds of members say they would consider increasing their investments in China if markets were open on a par with those in the US, a slight increase on last year,” the report said. The chamber represents 900 businesses.
Some of the sectors in which American firms were at a disadvantage to local firms include (a) healthcare services; (b) cloud computing; and (c) movies. Foreign investment in healthcare services is limited to 70 percent while in cloud companies, it is 50 percent. Regarding movies, Beijing insists that 75 percent of the revenue remains with Chinese production houses. In contrast, Chinese companies operating in these fields in the United States are free from such restrictions.
“We feel that local officials are reacting to the levels of tension in the relationship and just taking the safer path which is to offer preference to domestic industry,” Greg Gilligan, chairman of the chamber, said at a news conference in May.
He added that American companies were right in being worried about potential consumer boycotts and had to plan for such scenarios. Foreign brands like Nike and H&M have faced consumer boycotts in the country after they spoke against the use of forced labor of Uyghurs from Xinjiang.
At the U.S.-China Business Forum organized by Forbes China last month, Kenneth Jarrett, senior advisor to the Albright Stonebridge Group, stated that the Chinese business sector was seeing a “heavier intrusion” of politics. Even though companies just wanted to do business, it’s getting “increasingly difficult” for them to just purely focus on trade alone.
“[The landscape is] shaped largely by worries about U.S.-China relations. That’s No. 1 on the mind of most companies because it has created a degree of political uncertainty that we haven’t seen for a long time. And that really hasn’t eased, even as we are in month seven of the Biden administration,” Jarret said.
In August, U.S. Trade Representative Katherine Tai stated that Washington was conducting a “comprehensive review” of the U.S.-China trade policy. She stated that the administration remains committed to “addressing China’s unfair policies and non-market practices” that undermine American businesses.