The impending closure of Paul, Weiss, Rifkind, Wharton & Garrison’s Beijing office marks a significant turning point in the relationship between US businesses and the Chinese market. One of the first Western law firms to establish a presence in China following Deng Xiaoping’s economic reforms in 1978, Paul Weiss’s departure signals a deepening crisis of confidence among American companies operating within the country.
The firm’s announcement, made on Tuesday, comes as US President-elect Donald Trump’s plans to intensify the trade war with China cast a long shadow over inbound investment. Trump’s pledge to impose a blanket 60% tariff on all Chinese imports, in addition to existing levies, alongside a 10% tariff targeting Chinese drugs, paints a bleak picture for bilateral trade. His further commitment to expanding upon President Biden’s restrictions on China’s technology sector, particularly semiconductors and IT, only exacerbates the uncertainty.
Paul Weiss’s decision isn’t an isolated incident. According to Asian Legal Business, at least 12 other US law firms have exited the Chinese market in 2024 alone. This exodus underscores a broader trend of waning investor confidence and mounting challenges for American businesses operating within China. In October 2024, Wilmer Cutler Pickering Hale and Dorr closed its Beijing office, while Skadden, Arps, Slate, Meagher & Flom cited “shifting market dynamics” for the closure of its Shanghai office. Other notable firms like Reed Smith, Perkins Coie, Dechert, Morrison Foerster, and Sidley Austin have also announced office closures in Shanghai, Beijing, or Hong Kong this year.
The decline in foreign interest in China has been ongoing since Trump’s first term, but the President-elect’s promises of even more aggressive trade policies are expected to accelerate this trend. Nicholas Chen, Managing Partner with Pamir Law Group, commented to the South China Morning Post, stating, “As the Trump 2.0 Cabinet and policies take shape, the market anticipates further negative impact and disruption to global and US-China business flows.” Chen further highlighted that the impact of US tariffs would directly harm US supply chains and consumers, consequently affecting US service providers like law firms in China.
Beyond tariffs, the risks extend to potential legal and operational challenges. Andrew Collier of GlobalSource Partners, noted concerns about the potential detention of lawyers representing foreign clients in disputes with Chinese counterparts. This underscores a growing perception of increased risk and uncertainty for foreign businesses operating in China.
The situation is further compounded by a lack of profitability. Joe Simone, a partner with Simone Intellectual Property Services in Hong Kong, expressed a common sentiment among foreign investors, stating to the SCMP, “I don’t see a big turning of the corner in terms of investment and trade. If they don’t see China as a place to make money, then what’s the point?”
The potential economic consequences are substantial. UBS estimates that China could experience a GDP loss of up to 2.5% if the US imposes the promised 60% tariffs. This looming economic downturn, coupled with the political and legal risks, paints a grim picture for the future of US-China business relations, making the retreat of firms like Paul Weiss a stark warning sign for others.
Paul Weiss, in its statement, emphasized its continued commitment to Asia, maintaining offices in Hong Kong and Tokyo. However, the closure of its Beijing office, after more than four decades of operation, stands as a powerful symbol of the evolving—and increasingly challenging—landscape of doing business in China under the shadow of escalating US-China tensions.
