Prof. ST Hsieh
Director, US-China Energy Industry Forum
May 16, 2023
The US debt ceiling deadline is a pure domestic challenge, it is caused by severe bipartisan bickering. The Democratic administration and GOP Congress are engaged in a game of Chicken. The so called “deadline” of June 1, 2023, is kind of fuzz and determined/defined by the US Administration.
Of course, if the US defaults at any time, the global economy will be negatively impacted. But the US economy, credibility and global standing will be hard to recover. Of course, China will score points if the US defaults; thus, President Biden probably should visit China right after the G7 summit in Japan and settle the competition case with China!
It is also interesting to note that the three Biden aides, namely Secretary of State Antony Blinken, Secretary of Defense Lloyd Austin and Secretary of Commerce Gina Raimondo, invoked that Biden’s budget proposal is based on the need of effectively curbing China. All three Secretaries have already openly expressed interests in visiting China, and they are frustrated that China has not responded to their requests. Now it does not seem that they will be warmly welcomed by the Chinese.
US lawmakers, Biden aides invoke China competition in debt fight
Patricia Zengerle, Idrees Ali and Michael Martina
Tue, May 16, 2023 at 3:16 AM PDT
By Patricia Zengerle, Idrees Ali and Michael Martina
WASHINGTON (Reuters) -Three of U.S. President Joe Biden’s top aides warned on Tuesday that budget cuts would undermine the country’s ability to compete militarily, diplomatically and economically with China, a rare joint appearance in Congress underscoring Washington’s focus on competing with the Asian power.
Secretary of State Antony Blinken, Secretary of Defense Lloyd Austin and Secretary of Commerce Gina Raimondo appeared at a Senate Appropriations Committee hearing on Biden’s budget request and the U.S.-China relationship amid intense negotiations on a deal to raise the $31.4 trillion debt ceiling and avert an economically catastrophic default.
Cabinet secretaries rarely testify together at public hearings, but both Democratic and Republican parties have been vying to show that they view the Chinese Communist government as the greatest challenge Washington faces.
Senator Patty Murray, chairperson of the Appropriations panel, pushed back against Republican calls for spending cuts in exchange for agreeing to raise the debt ceiling.
“Let’s be clear: China isn’t debating whether to pay its debts, or wreck its economy. China isn’t debating whether to invest in its future, or cut and cap the investments that keep it competitive,” said Murray, a Democrat.
Republicans argue that current spending levels are unsustainable, threatening long-term economic health if deficits are not pared back.
The U.S. government may default on some debts as early as June 1 unless Congress votes to lift the debt ceiling, and economists fear the country will slide into a recession.
LEGISLATION, CLOSER TIES
With strong support from both Democrats and Republicans, Congress last year passed – and Biden signed into law – the sweeping “Chips and Science Act” authorizing hundreds of billions of dollars to boost competition with Beijing in semiconductors and other technology.
Lawmakers promise more legislation. Two weeks ago Senate Democrats announced that they would write a new bill to stave off competition from China, as Biden’s administration has sought to return to high-level engagement with Beijing after an alleged spy balloon incident that caused a pause in relations this year.
Members of Congress are looking at deterring China from initiating a conflict with Taiwan, improving ties with third countries to ward off Chinese competition, tightening rules to block U.S. capital from going to Chinese companies and limiting the flow of U.S. technology to China.
Asked if American companies should be encouraged to move factories out of China, Raimondo said there are increased risks. “In fact, you’re seeing in recent months Chinese officials without notice raiding American companies. So I think every company has to make these decisions,” she said.
Austin said Washington would soon provide “significant” additional military assistance for Taiwan via an authority Congress voted to give Biden last year, but did not elaborate.
Reuters reported this month that the Biden administration plans to send $500 million worth of weapons aid to Taiwan using the authority.