Prof. ST Hsieh
Director, US-China Energy Industry Forum
626-376-7460
August 9, 2023
US-China relation is crucial as well as complex, and Biden’s approach is much more deliberate than Trump’s stunts. Biden’s one difficult balancing act is generating domestic support for his policy. Given the current political environment in the US, it is almost impossible to expect majority support. So, the next best approach is to minimize the oppositions.
The next challenge for Biden is to convince as many allies as possible to join his actions against China. It is also very difficult. The geopolitics is transforming quickly, and every major US ally has its unique position as well as constraints with respect to dealing with China. No ally can fully join the US countermeasures against China. It means that Biden needs to spend his resources convincing US allies not to openly disagree with US.
Of course, the utmost test of Biden’s balancing act is China’s response. China has openly indicated that China does not trust Biden’s words and asks Biden to honor his words with matched actions. Biden and his State Department have repeatedly signaled to China that Biden desires to improve the current US-China relation, and the US has no interest in containment or constraining China’s development. But Biden’s actions including blocking technology transfer and restrict capital flows to China, of course “China is very disappointed.”
As the US general election is approaching and Biden is fighting for his re-election, it will be impossible for Biden to show any concession to Xi during their interactions. So why is Biden pushing for a summit with Xi?
Biden Narrows China Investment Order as US Seeks Better Ties
Jenny Leonard
Wed, August 9, 2023 at 2:43 PM PDT·6 min read
(Bloomberg) — President Joe Biden imposed limits on US investments in China as part of a push to restrict the country’s ability to develop next-generation military and surveillance technologies that might threaten US national security.
The order, announced Wednesday, would regulate US investments in some Chinese semiconductor, quantum computing and artificial intelligence firms.
It was signed after almost two years of deliberations that saw China hawks argue for faster, tougher action while others, including the Treasury Department, sought narrower measures that would take longer to go into effect.
While details of the rules still need to be worked out, the language of the order suggested that Treasury and those advocating a more cautious approach won out.
The order, which won’t go into effect until next year, won’t be retroactive and excludes sectors such as biotechnology. It may end up exempting passive investments as well as those in publicly traded securities, index funds and others assets.
“For the business community, this is relatively good news,” said Sarah Bauerle Danzman, a senior fellow at the Atlantic Council and associate professor of international studies at Indiana University. “It’s a relatively narrow notification process and very narrow set of prohibitions.”
‘Very Disappointed’
China is “very disappointed” in the US decision to go ahead with the restrictions and will safeguard its own interests, Embassy spokesman Liu Pengyu said in a statement.
“China opposes the U.S. overuse of national security to politicize and weaponize trade, scientific and technological issues and deliberately making obstacles to normal economic and trade exchanges and technological cooperation,” Liu said.
The restrictions are the latest in a series of US actions that have complicated the Biden administration’s push to improve relations with China, after a succession of flare-ups over Taiwan, rights abuses in Xinjiang, intellectual property threats, and an alleged Chinese spy balloon that was shot down in February.
Low-Key Rollout
The White House announced the order after US markets closed Wednesday, but reaction was expected to be muted. Major US investors had anticipated it for some time, and venture-capital firms had already been scaling back their bets on Chinese startups for well over a year.
A relatively low-key rollout on Wednesday showcased how cautious the White House is about ratcheting up tensions with China. Instead of announcing it in the presence of media and giving public remarks on the matter — as is often the case for executive orders — Biden opted to sign it while out of town and without cameras. The president was traveling in New Mexico to promote his “Bidenomics” agenda and didn’t address the order.
Allies, Businesses
A key question now is whether other countries will follow Washington’s move, including fellow Group of Seven countries. The administration has briefed allies and partners about the order over the past year, arguing that it must be done in coordination with them to avoid the backfilling of curtailed US investments. So far, none have followed through.
A fact sheet that accompanied the announcement underscored how much of the order remains a work in progress. It said, for example, the Treasury was “considering” the prohibition of investments in technologies that remained loosely defined, with more specific definitions subject to input the Treasury will gather during a 45-day comment period.
Daniel Tannebaum, partner at Oliver Wyman, said that the release of the EO is just the start of the process and gives businesses plenty of time to weigh in on how the restrictions will ultimately work.
“We’re not done yet,” Tannebaum said. “We need to see what this ultimately looks like but it’s encouraging that they’re giving industry a chance to weigh in on a whole host of topics.”
Courting Congress
Representative Raja Krishnamoorthi, an Illinois Democrat, said the order was essential but “cannot be the final step.” House Foreign Affairs Chairman Michael McCaul, a Texas Republican, said the failure to include existing investments and the decision to exclude sectors such as biotechnology were concerning.
“The administration scaling back — at a time where aggressive action is needed more than ever — continues the trend of appeasing industry at the cost of national security,” McCaul said in a statement.
Biden’s new China rules
With a new executive order today that seeks to ban investment in certain Chinese sectors, President Biden is trying to restrict more than just U.S. dollars from flowing into China’s tech industry, Axios’ Hans Nichols reports.
- He also wants to prevent the transfer of American know-how from top private-equity and venture-capital firms to China high-tech industries.
🔎 Between the lines: At the same time, top officials didn’t want to impose overly broad prohibitions on investing in China’s economy.
The result is an executive order that’s narrowly focused on restricting investments into three specific industries that could give China’s People Liberation Army a global advantage over the U.S. and its allies:
- Quantum computing.
- Semiconductors.
- Artificial intelligence.
“China doesn’t need our money. They are a net capital exporter,” a senior administration official said.
- “The thing they don’t have is the know-how.”
🖼️ The big picture: The new restrictions, which have been telegraphed by administration officials for most of the year, represent a new chapter in U.S.-China relations.
- They threaten to upend the incremental progress the Biden administration has made this summer in repairing relations, after a Chinese spy balloon that flew over the U.S. was downed off the coast of South Carolina.
- But officials are willing to risk short- or medium-term diplomatic friction with Beijing to achieve the long-term goal of preventing U.S. capital and knowledge from helping China’s military leapfrog the U.S.
China ranks 1st in world in scientific research output, most-cited papers: report
Michelle De Pacina
Wed, August 9, 2023 at 7:48 AM PDT·1 min read
China has produced around a quarter of all scientific papers published worldwide, a recent report revealed.
China versus the U.S.: According to the report, 61% of citations of Chinese papers were by Chinese researchers, while only 29% of citations of U.S. papers were by American researchers.