Q&A: Asia Society’s Anna Ashton on Biden’s trade strategy and doing business in China

Anna Ashton is a senior fellow for Asia Pacific Trade, Investment, and Innovation at the Asia Society Policy Institute. Her research focuses on the United States and China’s respective economic engagement in the region and implications for the U.S.-China bilateral relationship, as well as U.S. policy more broadly.

Ashton is the emcee of the The China Project’s Women’s Conference 2022, which is slated to take place virtually on May 19 and in person on May 20. Get your tickets here before they sell out!

Ahead of the event, we recently spoke to Ashton to get her thoughts on Biden’s China trade strategy and the moral dilemma faced by U.S. firms when doing business in China.

An annual survey by the American Chamber of Commerce in China has revealed that foreign companies are now feeling less confident about doing business in China, citing concerns of slowing economic growth, uncertainties surrounding China’s COVID-19 policy, and political tensions with the U.S. What do you make of the findings? Do you sense a lot of pessimism when talking to American companies that have operations in China or want to do business with China?

Anna Ashton: Given China’s COVID-19 policy and the recent Shanghai lockdown, I definitely think that the pandemic has intensified ongoing concerns with the U.S. business community. Practically speaking, not being able to travel to and from China more regularly or more easily makes certain business harder to get done. And I think that there’s been an attitude in the business community that they’re hanging in there waiting for the travel restrictions to loosen, but with the COVID lockdown in Shanghai and the continued intense travel restrictions in general, I think that the stress around that is growing, and that it has underscored for them the fact that this is going to be a continued cause of business uncertainty until the Chinese government perhaps decides to revamp its approach to COVID.

I myself have not heard that changes are in the works, but I think the zero-COVID policy was clearly incredibly effective for quite some time, while other countries really struggled to get a handle on their own outbreaks. At this point with most of the world opening up and learning to live with COVID, it starts to look like a vulnerability for China in terms of economic relations and trade relations. I also think that, definitely the refrain from the business community for the entirety of the time that Trump was in office, and over the course of the first year of the Biden administration—I speak to the business community less now than I did, because I’m at the Asia Society Policy Institute,  so I’m not working in that trade association capacity that I was previously in–but certainly for all of the time that I was working at the U.S.-China Business Council, the regular refrain we heard from companies was about how crucially important the China market continued to be for their business, how it was this indispensable market for them, if they wanted to remain competitive globally, or become competitive globally.

I think that most American companies that have operations in China still feel that way. And with or without COVID restrictions, with, or without supply chain challenges, they’ll probably continue to feel that way because China itself is such a massive market and growing. Being competitive globally is really, in some significant part, about being competitive in China, but there’s a ton of political pressure on companies to lessen their dependence on China in their supply chains. I think that the supply chain vulnerabilities created by the lockdowns are new pressures for them to consider being less reliant on China in their supply chains. They may be at the point where they have to start considering decisions that they don’t really want to consider.

In the past few years, a slew of foreign brands that have taken a stand on human rights issues in China have faced backlash from the Chinese government and boycotts by consumers. How should American businesses perceive these controversies?

Anna Ashton: Here in the U.S., we’re definitely in this moment where trade and companies engaged in trade, particularly those that are engaged in trade with China are being treated like they are values’ vehicles. American companies are expected to have a responsibility and they have to follow U.S. laws. And they need to be upholding labor and other standards in their operations that align with our law. But they’re also increasingly expected to not just abide by U.S. laws, but also promote and advocate for US values, regardless of whether or not the law requires them to. They’re under political pressure to do so. And I think that, that’s where the backlash is most often seen, is where companies are taking public positions that they’re not necessarily required to take.

They are not shielded by some U.S. government law that mandates that they do it, but some American firms are clearly responding to pressures from U.S. officials and other constituencies. In some cases, the message that they convey doesn’t resonate with Chinese customers, or it resonates really badly. I don’t think U.S. companies should be treated like this tip of the spear for U.S. efforts to promote democratic or other values via public statements. I think it puts them in a vulnerable position, and it generally doesn’t change or rectify whatever conditions U.S. officials think need to be addressed. It just makes it more likely that those companies will struggle to be successful in that operating environment. And in turn, it diminishes the chances that they’ll be able to promote U.S. values through their operating practices and through their sourcing expectations through business, which I think is the best way for U.S. companies to promote American standards.

What advice do you have for American companies that are walking a tightrope at a time when nationalism is rapidly intensifying in China?

Anna Ashton: I don’t have great advice for companies beyond asking governments to take the lead in regulating rather than pressuring the private sector to be the de facto standard setters and standard bearers advancing positions that the U.S. government itself hasn’t formally embraced. An important point here is that a lot of times American companies are being asked to explicitly take positions that the U.S. government has not taken. For example, they may be asked to explicitly label Taiwan as a separate country in their maps, or in their products, where the U.S. government hasn’t done that. So why is the U.S. government pushing companies to do what it hasn’t yet decided it should do? I don’t think that’s fair to them. And I think emphasizing to the government that it should be making the regulations and those regulations should be a shield for companies that are trying to be compliant is one way to address this.

But, of course, it’s a double-edged sword, because when you ask government to regulate more, in general that comes with some unwanted regulations for business on top of which, we’ve been seeing this growing trend of the Chinese government responding every time the U.S. government makes a new effort to exercise long arm jurisdiction, and creates policies that apply to Americans and U.S. companies abroad. It seems like the Chinese government is now responding with contradictory rules that I haven’t yet seen the contradiction actually come to a head for any companies, but definitely there’s this looming threat that’s growing for them that at some point they may be forced to choose whether they’re going to follow the U.S. law or Chinese law and deal with the consequences, which could mean having to leave the market entirely.

One other thing I want to point out on this is that values’ politics and Washington’s approach to China policy is also full of contradictions. Values’ politics isn’t just about China. It’s obviously something that is much broader than that in Washington. For example, in the wake of the National Basketball League controversy, where the NBA was trying to smooth over an owner’s tweeted support for Hong Kong protestors, there was scathing criticism of the NBA from lawmakers who basically accused the league of selling out U.S. values for profits in China. But some of the most vocal critics of U.S. companies’ failure to speak out in support of Hong Kong protestors were also among the most indignant critics months earlier of the National Football League’s tolerance of American football players kneeling during the national Anthem at games.

Clearly, there’s something hypocritical there, but I think it comes down to a couple of things. Number one, we have these very intense values’ struggles happening in U.S. politics and among Americans. Right now we have really culture wars happening domestically, which are affecting our approach to foreign policy and trade relations. Number two, I think that it speaks to distrust of companies in the U.S. and in U.S. politics right now, that makes it harder for companies to be facilitators in trying to improve the U.S.-China relationship. I think that companies have really tried to emphasize to US policymakers and Chinese government officials the importance of the relationship and their desire to see it stabilize and to maintain these mutually beneficial economic ties that are pretty important to both nations. But I just think that we’re in a moment where there are real questions around whether or not multinational companies really have a stake in America’s future competitiveness and whether doing things to help those companies actually is in our national interest. I think that there are a lot of policymakers wrestling with that.

As President Joe Biden launched into his second year in office, some observers said it’s still unclear what the administration’s approach is when it comes to the U.S.-China trade relationship and how it differs from that of the previous administration. Do you agree or disagree with them? In your opinion, what IS the Biden administration’s policy toward trade with China? What are some of the American firms you are in touch with telling you about what they’d like to see from the Biden administration?

Anna Ashton: I think overall there’s this tendency to say that the Biden administration’s approach to China is the same as the Trump administration’s, and I don’t think that’s true. First of all, the Trump administration approach to China evolved over the course of the four years that Trump was in office. And I think we could all agree that Trump’s approach was initially very focused on the trade relationship and this idea of somehow rebalancing it, but it became so much more than that. And it was fairly chaotic because there were a lot of Trump advisors on China issues and it didn’t seem like they were always on the same page.

That there was a degree of volatility in the Trump’s administration’s approach to China, that it was due to the fact that the Trump administration itself didn’t have one clear vision of what they wanted out of the relationship. I don’t think that that same volatility is there with the Biden administration. To be a little bit more precise about it, I think there remains a lot of volatility in the relationship. I think that the relationship’s deteriorated over the past few years, but I don’t think that the Biden administration is as divided or uncertain about what direction it wants to take with China. I do think it’s clear that they’ve decided to stick with this competitive framing. And I think that there are some significant political constraints that they’re dealing with that make it hard, not only for them to have a lot of flexibility in how they approach China, but also for us to ascertain whether or not they’d even want that flexibility.

I think that the Biden administration is a different animal. It’s a bit more methodical, and it’s definitely more focused on the multilateral engagement component of figuring out how to respond to what it perceives to be this century-defining challenge. But I’m not sure that it really matters that the Biden administration is different, because the confluence of political constraints, both domestic and foreign, both in the U.S. and in China, and the deterioration of trust has put the relationship in a really hard place either way.

When it comes to trade, I don’t think that there is sufficient support within the Democratic Party for a robust trade agenda with China, or with other partners, at least not in the traditional sense, for us to see a lot of movement away from what the Trump administration’s policies were. I don’t think it’s that they think that tariffs are working in any way, I think they’ve been pretty clear both during the campaign and since Biden took office that they see the downsides of the tariffs, but they continue to reiterate the tariffs are a tool and that they’re going to use all of the tools available to them to try to better manage the relationship. And I feel like also trade has not been a top priority issue for the Biden administration.

They came in saying that they were going to focus first on domestic priorities and then turn to foreign policy issues. And I don’t think trade was a top priority among the foreign policy issues either. So perhaps when the Indo-Pacific economic framework details begin to come out, we’ll have a better idea. But in the meantime, the bilateral trade relationship looks about the same.

Do you see the Biden administration issuing any substantial trade policies in the near term? Is there a sense of urgency in the office?

Anna Ashton: Not that I’m aware of. I think it depends on who you ask, because I feel like if you asked Katherine Tai, her answer would involve the Biden administration’s idea that what matters for trade in the 21st century is different from what mattered in the 20th century. And we’re not going to be focused on market access negotiations anymore. We’re going to be focused on these issues to do with labor and climate. I think if you are talking to the business community though, while everybody will acknowledge that those are important components, there is a lot of interest in seeing more focus on market access and more traditional trade issues. And I don’t think that there is urgency to address that stuff yet.

What are some realistic steps that U.S. and Chinese policymakers could take to strengthen economic ties? Are there any positive signals from the Chinese side that suggest a preference for cooperation rather than confrontation?

Anna Ashton: The signals in general from the Chinese side over the course of the last five and a half years have been patient. There is a great deal of patience exercised by the Chinese government, hoping that American policymakers would come to their senses maybe, and remember how crucial the relationship is and start being more productive and pragmatic in negotiating what they wanted.

This has started to get worn away because there has yet to be any clear sign that U.S. policymakers are going to turn around and start approaching things in a way that is even remotely similar to how the relationship was conducted prior to 2016, or prior to 2017. I think that there was probably a lot of hope as the Biden administration was entering office, but that’s probably largely gone now. And I guess when I think about how to keep the economic relationship on course, I really feel like we should take a step back and broaden the aperture and just think about how to keep the relationship on course in general. And the number one thing that I think would really make a difference is a return to regular dialogue and engagement between, not just the most senior officials in both governments, but also agency level officials, because we used to have such robust dialogue in the relationship. I think that there was a growing sense of frustration on the U.S. side that a lot of those dialogues were meant to drive reform and ongoing negotiations, and that they weren’t delivering more than incremental change in general.

But I think that whatever frustration there was with those dialogues, it ought to be outweighed by concern over the state of affairs right now. We’re in such a vulnerable and volatile situation now bilaterally that I think that we ought to be able to put aside concerns over how much progress is enough progress and just start talking again. And if we would do that, that might actually help normalize things.

What initially drew you to China studies and how did you come to focus on China trade and investment issues? Do you have any advice for someone looking to become a China analyst in either public or private sector positions?

Anna Ashton: So basically, I fell into China studies. When I first went to college, I thought I wanted to major in comparative literature. And so I spent the first year and a half of college taking all of these great literature courses across different departments. I loved the classes, but I realized during those three semesters that I wasn’t going to end up graduating with a skillset that I could apply in the workforce. Literature is so dependent on the cultural context, historical context, the language in which it’s written. I certainly wasn’t learning to interpret foreign literature, because you can’t just broadly learn to interpret foreign literature, you specialize.

I just decided, I’ll be better served to pick a region, or a country and do area studies, and learn about the history and the culture and the language. And then I’ll have a skill to build and work with. And I actually was interested in Japan. I had taken some post World War II Japanese literature classes that were really fascinating to me. And I thought that was the direction I was going, but my dad had recently taken a job in Hong Kong. And when I was talking to him about it, he said, if you’re going to put in the effort to learn a language that is different from English as Japanese, you should really learn Chinese. It’s going to be way more useful. Plenty of Americans speak Japanese, but there’s going to be a huge demand for Americans who speak Chinese and know something about China. And I don’t see a whole lot of people doing that right now, or pursuing that.

I was a pretty rebellious teenager, but for whatever reason, I took his advice. And then once I started down that path, it grabbed me. I think everybody who comes from a background of having majored in Chinese studies has a similar experience of getting the China bug or whatever, and getting really fascinated. I think what I realized was it’s a bottom list area of study because Chinese culture is so rich, Chinese history is so long. You could study it your whole life and still be learning. So I thought I was going to pursue literature and maybe teach. So I thought I’d go for my PhD. I got into my master’s program, was almost through with it when my husband finished law school and got a job in Washington and at the department of justice and really wanted to take it. So we moved to Washington and there wasn’t a PhD program that was literature related in the area.

I started thinking about how to apply the China background that I had to jobs in Washington. And I had never really considered working in a policy related position. There weren’t many options so I applied to intelligence agencies because I was like, what else do I do? And I ended up at the defense intelligence agency. I spent about three years there and realized during that time that I really liked working on policy and working on the contemporary relationship and identifying challenges in the relationship, but I didn’t want to work on that part of the relationship. I came away feeling like, okay, it’s important for there to be people who are imagining worst-case scenarios and planning for them. But I really want to be imagining best-case scenarios, and building friendship and positive ties, not preparing for war.

In my limited time in Washington, I felt like the most significant work that was happening, that was contributing to that bridge building and helping deepen positive ties in the relationship was in the trade space. And that’s how I ended up spending the last, however many years working on China trade issues. And I definitely am really glad that it was a circuitous path, but I’m really glad that it took me where it did because I’ve really enjoyed the work. My only regret is that I haven’t been able to do more of it in China. So maybe in the future.

One piece of advice I can give is that when I was going through school, it was still completely acceptable for China expertise to be your expertise in a job search. And you didn’t even have to have very strong China expertise, because there really was such a shortage of people who were pursuing degrees focused on China. When I was first entering government work, there were plenty of China analysts who didn’t even speak Chinese at all and had no background because they were just good analysts who got reassigned essentially. It really has changed in recent years. Although there may be fewer American college students pursuing Chinese studies right now, I think that overall the growth of interest in Chinese studies has been significant. And now when I encounter young people who are in college or graduate school and looking for internships, they, first of all, their Chinese language skills are far better than what was the norm when I was their age. And second of all, they clearly understand that they need some other, some additional specialization to help them stand out. If you want to work in China-related fields, you should be experts on China and economics, China and political science, China and literature, China and whatever you want to put in that second blank. So basically, a background in China that supports your interest in something else, or vice versa, a background in something else, economics, political science, science, climate change, et cetera, that supports your interest in China makes you more marketable.

The second piece of advice would be that you don’t need to land exactly the right job in order to have a satisfying and rewarding and exciting career. You just need to land a job that gets your foot in the door doing work that is China-related if that’s what you want to do. I think focusing on getting your foot in the door and then working really hard and performing well at that first job, and then building from there as you expand your network, more opportunities will arise.