Think Tanks Split on U.S. Business Ties to China

Two Washington think tanks released separate reports with different prescriptions for U.S. policy toward China. The Information Technology and Innovation Foundation published its analysis on May 4. The Center for Strategic and International Studies released its report on April 29 after a year of expert discussions.

The ITIF report found U.S. affiliates in Greater China generated more than $640 billion in revenue in 2023, with roughly 70 percent of production-about $441 billion-sold to Chinese consumers. The foundation identified almost 2,000 U.S. companies operating in mainland China and 921 in Hong Kong that reported assets, sales or income above $25 million in 2023. Among publicly traded firms, 173 disclosed China revenues totaling more than $307 billion in 2024, with Apple accounting for 22 percent of that disclosed total. Manufacturing made up 55 percent of U.S. company sales in China in 2023, the highest share in a decade.

The ITIF analysis found U.S. research spending in China nearly doubled from just over $3 billion in 2014 to almost $7 billion in 2023, and that firms with larger China sales tended to show higher research intensity. The report also said U.S. firms invest less in research in China than in Europe, Japan or South Korea. Sector data showed heavy local-market reliance: food producers sold 96 percent of output to Chinese consumers and transportation equipment makers sold 92 percent locally.

Employment at U.S. affiliates in Greater China declined from 2016 through 2023, with 2021 as the only year without a decrease. The study recorded a 25 percent drop between 2018 and 2019 during a period of trade tensions. Total employment at U.S. affiliates stood at about 1.2 million people in 2023, with manufacturing accounting for 52 percent of that workforce. The American Chamber of Commerce in China reported 84 percent of member companies have management teams composed mostly of Chinese nationals. The U.S.–China Business Council reported 18 percent of members were operating at a loss and that more than one quarter of companies had considered moving operations out of China over the past four years, a 71 percent increase from earlier periods.

The ITIF report presented reasons for continued commercial engagement. It noted access to Chinese technical talent, citing that China produces an estimated 47 percent of the world’s top artificial intelligence specialists versus 18 percent in the United States. The report gave examples of U.S. firms adapting products based on Chinese customer feedback and outlined points of dependency in Chinese supply chains, including the continued dominance of American laptop and phone operating systems and the use of U.S.-supplied engines on China’s C919 commercial jet. Public-opinion data in the report showed 79 percent of Americans worry about unfair Chinese trade practices, while 12 percent support a complete ban on U.S. investment in China; 46 percent favor narrow restrictions on advanced technologies and 18 percent oppose any ban.

The CSIS analysis recommended building intelligence capabilities and using real-time data to identify and counter Chinese influence operations. The report emerged from consultations with 58 experts in national security, technology and public communications. It proposed three broad actions: continuous monitoring using open-source intelligence to locate vulnerabilities and illicit flows such as fentanyl trafficking; improved information sharing across government agencies and stronger communications aimed at local audiences to counter Chinese narratives; and preparing targeted economic and operational measures for potential conflicts, including acquiring key nodes in supply chains and options to disrupt adversarial shipping networks. The CSIS analysis also recommended drawing attention to statements by Chinese officials that reveal intentions.

The two reports offer contrasting approaches. One emphasizes maintaining corporate presence in China to retain market access and technical ties; the other emphasizes intelligence-driven monitoring and targeted measures to limit specific influence and risks.