Thu. Sep 29th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

May 26, 2022

The grades are all over the places from A- to Incomplete. From our perspective, Biden’s Asia trip last week is an “incomplete” to begin with because his trip was all about China, yet Biden did not visit Beijing! But US-China relation will not reset or stabilize until Biden and Xi have a meaningful summit. The long awaited “China Strategy” speech by Secretary Blinken today did not have much detail or action items. President Biden still has to decide his tariff policy against China, as of now Biden’s tariff policy is identical to Trump’s. Summary of the grades:

  1. Biden’s Trip to Asia: Moving Forward. The question is “moving forward” to what? Biden has to show his cards!
  2. without engaging the U.S. Congress and the Chinese government, I fear we will not see much concrete action. Biden administration has engaged US Congress, but his legislative initials have been stalled, not by the GOP but the Democratic. Engaging China would be challenging after Biden affirmed at the Press Conference that he would defend Taiwan with military. At best, it is “strategic confusion,” at worst it is stupid.
  1. Biden Trip to Asia: Long-term technology policy strategy remains muddled.
    We cannot say Biden’s Asia trip was premature, but there are major issues at home need be addressed first including a clear China Strategy.

Blinken expressed today a strong desire of more active communications with China, it has to start from the top. During Biden’s Asia trip, the keynote is to fully “contain” China with IPEF and QUAD so it is not surprising that China is “breaking out” or “breaking away” from the US.

The world is now bogged down by the Ukraine war, US is providing Ukraine with almost unlimited military armaments, should the US engage China for initiating a sincere cease-fire effort?

Passing But Incomplete: Grading President Biden’s Asia Trip

May 26, 2022

Although President Biden’s recent trip to East Asia did not involve a visit to Beijing, China featured largely from beginning to end. The agenda in South Korea and Japan covered bilateral and regional national security and economic issues, many of which were animated by the strategic competition between China and the United States – and the West more broadly.

The President has extended interactions with President Yoon Suk Yeol of South Korea and Prime Minister Fumio Kishida of Japan, after which there were wide-ranging press conferences (SeoulTokyo). In Seoul, the United States. and South Korea announced new investments in Georgia by Samsung, and in Tokyo the United States and Japan made progress on the U.S.-Japan Climate Partnership and the U.S.-Japan Competitiveness and Resilience (CoRe) Partnership. President Biden and Prime Minister Kishida issued a Joint Leaders’ Statement on Strengthening the Free and Open International Order. Tokyo also featured the launching of the Indo-Pacific Economic Framework (IPEF) involving the United States and 12 other countries, and a meeting of the Quad (joint statement).

Given that China was not present but still ever present, we asked the brain trust of Trustee Chair in Chinese Business and Economics to answer the question: “How do you evaluate the effectiveness of the President’s trip in terms of handling the challenge from China?” They were asked to provide a letter grade and a brief explanation.

The six responses which we received – and share below – were far from uniform. Substantively they covered a wide range of issues, from IPEF to climate change to security ties. Moreover, their evaluations were equally diverse, from those who gave high marks because they believe the trip achieved as much as could be expected given various constraints, to those who doled out lower grades because they determined that the reported progress was relatively superficial and left substantial areas of disagreement that will not be easily resolved.

Below we share their evaluations, listed from highest to lowest. As usual, your feedback is warmly welcomed.

-Scott Kennedy, Trustee Chair in Chinese Business & Economics, CSIS
 

John L. Holden

Senior Associate (Non-Resident) and Head of China Practice, McLarty Associates

Grade: A-

Biden’s Trip to Asia: Moving Forward.

Viewed through the lens of politics – “the art of the possible” – President Biden’s trip to the Republic of Korea and Japan should be judged a success. He reinforced bilateral relations with those key American allies on both security and economic matters; launched a program (IPEF) that represents a platform for progress towards deeper commercial ties with the region; and agreed with the leaders of the other Quad nations to create a substantial common good for the region, the Indo-Pacific Partnership for Maritime Domain Awareness. Biden made headlines when he replied “yes” to the question of whether the United States would “get involved in the Ukraine conflict militarily” should the PRC invade Taiwan, possibly edging the United States away from its default policy of “strategic ambiguity.” What the consequences might be is a subject far too complex and contentious to discuss here.

Biden’s trip to Seoul and Tokyo deepened strategic dialogue with Korea and Japan, advanced new initiatives, and signified U.S. commitment to the Indo-Pacific region. He gets an A- in his mid-term exam; the course is not over.

Jeannette Chu

Senior Associate (Non-Resident) and Managing Director, PricewaterhouseCoopers

Grade: B+ for effort, incomplete for results

Garnering multilateral support for regional security is a win, but concrete, and sustainable, outcomes remain elusive and undefined. 

President Biden’s carefully choreographed trip to Asia felt anti-climactic in the wake of the ongoing crisis in Ukraine and challenges on the domestic front. Nonetheless, rallying support from South Korea and Japan, launching the Indo-Pacific Economic Framework (IPEF), and leading the Quad dialogue all served to reinforce long-standing alliances in the region. The importance of these relationships, including strengthened ties with South Korea’s electronics industry, must not be overshadowed by the President’s off-the-cuff remark about Taiwan. Instead, this trip should lay the groundwork for a thoughtful, coordinated economic and strategic response to Beijing, not just talk around the edges of the juggernaut that is China. The Biden Administration will need to be prepared to pull on these relationships in order to maximize impact. 

I join Claire Reade in giving the President an “incomplete” grade for the lack of measurable outcomes. Moreover, many of the current challenges with China are long-standing and intransigent issues in our bilateral relationship. Deborah Seligsohn has made a very important point about the necessity of Congressional support and engagement with China – without both of these it is difficult to see how forward movement is possible. I agree with Paul Triolo that a long-term technology supply chain strategy must be implemented; however, again, it is difficult to see how this can be achieved without support and funding from Congress. And I also agree with John Holden that the semester is not yet over and now is the time to plan for a long game. That said, it is important to regularly take stock of progress. Our national security policy is integrally tied to trade policies and must always be recalibrated for maximum effectiveness.

Ilaria Mazzocco

Fellow, Trustee Chair in Chinese Business and Economics, CSIS

Grade: B-

President Biden gets points for supply chain resilience and clean energy being included as pillars of the IPEF, but the lack of clarity on how the objectives will be achieved and the fact that they could be ignored altogether by countries that focus on other pillars mean that any evaluation is largely based on political symbolism rather than real policies. And, as noted by Deborah Seligsohn, the broad and vague action areas listed in the clean energy pillar seem unrealistic given the current domestic political environment in the United States. Moreover, the inherent tension in the Biden administration’s policy of advancing climate goals while reducing reliance on Chinese supply chains remains as glaring as ever. Overall, the trip’s main objective seemed to be diplomatic – to galvanize allies and highlight the potential benefits of more cooperation among likeminded countries. So, my mark is not as low as it may have otherwise been. But the meetings of these past few days offered few real solutions to the issues that have come to define the Biden presidency, including supply chain resilience and the realignment of economic and political interests.

Deborah Seligsohn

Senior Associate (Non-Resident) and Assistant Professor of Political Science, Villanova University

Grade: C

Looking particularly at the issues I focus on, climate change and global health, I’m afraid I would have to give President Biden a C. He would get higher marks for his political engagement with allies, as John Holden describes. That is one of the President’s great strengths, and we’ve seen how effective he has been in strengthening NATO and supporting Ukraine. It is equally important to do the day-to-day work of shoring up alliances in the Pacific and deepening ties to emerging countries like India and Vietnam.

But in the “global issues” basket – particularly our greatest challenges, climate change and pandemic response/preparedness – there is no way to get around the two elephants in the room – U.S. domestic policy and the U.S. relationship with China. The U.S.-Japan climate partnership looks useful but is secondary to a robust relationship with the much greater emitter across the East China Sea. At the regional level, the Indo-Pacific Economic Framework (IPEF) places clean energy as one of its three pillars, and Secretary Raimondo said it would establish “renewable energy targets, carbon removal purchasing commitments, energy efficiency standards, and new measures to combat methane emissions.” But several of these cannot be done in the United States without Congressional approval, and the President has not had luck in passing his Build Back Better Plan. Similarly, the Quad has promised to cooperate on global public health, but given the importance of China both as one major source of disease risk (not the only one, but with its large population, critical) and its key role today as a source of scientific innovation, a robust response requires repairing the atmosphere of mistrust between the United States and China, and engaging in forward-looking efforts to vaccinate the world and prepare for the next pandemic. We also need U.S. domestic funding to have any hope of cooperating with any of these countries, but our COVID spending has plummeted with little available for international engagement and support.

Thus, I’m afraid on these global issues I see good intentions, but without engaging the U.S. Congress and the Chinese government, I fear we will not see much concrete action.

Paul Triolo

Senior Associate (Non-Resident) and Senior Vice President for China and Technology Policy Lead, Albright Stonebridge Group

Grade: C

Biden Trip to Asia: Long-term technology policy strategy remains muddled

The Biden trip to Asia has added marginally to our understanding of the administration’s broader technology and trade policy priorities and how it intends to address them. Supply chain resilience, specifically for globally driven sectors such as semiconductors, EV batteries, and rare earth minerals were front and center on the trip. Biden stopped first in South Korea at a major Samsung semiconductor manufacturing facility, with Commerce Secretary and IPEF supply chain resiliency proponent Gina Raimondo in tow, touting a partnership with Seoul on resilient supply chains. Behind all the rhetoric on further likeminded country cooperation in securing and diversifying supply chains critical to critical technology sectors via the IPEF and Quad, remain some uncomfortable truths that all the happy rhetoric about cooperation cannot alter.

First, the United States and other Western countries will remain reliant on Taiwan and TSMC in particular for advanced manufacturing for the foreseeable future – 92 percent now for advanced nodes, with little prospect of onshoring or friend-shoring making a serious dent in this for 3-5 years and likely much longer. In this context, Biden’s off-the-cuff remarks in Japan, the third time he has done this – promising the United States would back Taiwan militarily in a heretofore unlikely China invasion scenario – would appear to do more to hasten such an outcome than forestall it. U.S. national security policy with respect to Taiwan should arguably be to do everything to avoid conflict until there is sufficient capacity for advanced manufacturing outside Taiwan, abiding by the spirit of previous agreements on Taiwan, and continuing strategic ambiguity should be part of this. Appointing a Taiwan czar for the White House with a deep understanding of the history and documents governing the three-way relationship who could speak authoritatively to Beijing on the issue should be a priority. 

Second, the reality is that China’s dominance of rare earths and strategic metals, including those used in EVs and other key areas such as magnets, is massive, and not easily reduced without major new incentives to the private sector, along with the generation of a multilateral long-term industrial policy strategy that does not appear to be on the table, IPEF or not. Without Chinese inputs, for example, any Biden green agenda remains completely unworkable in the near term, and the administration is not doing much to change this equation over the medium- to long-term. Hence, yes, everyone can agree that supply chain resilience and diversity would be great, but no one is talking about the actual costs to industry of changing the current situation, who would pay for it, and whether it makes sense to push further decoupling from China, which is the largest trading partner for the countries in the Asia-Pacific region visited by Biden and targeted by IPEF. Missing from the visit was a coherent and long-term strategy for both confronting and engaging with China. Without this, countries in the region will hedge on IPEF commitments, eager to avoid being forced to choose sides if the rest of the Biden administration primarily means confrontation with their regional neighbor that will continue to cast a long shadow.

Claire Reade

Senior Associate (Non-Resident) and Senior Counsel, Arnold & Porter

Grade: Incomplete

The basic infrastructure of the IPEF initiative, which is the basis of my evaluation, is promising – 41 percent of global GDP is represented, and a wide scope of critical trade issues will be tackled, where clear, sophisticated workable rules and standards can make a huge difference. Just imagine the value of strong digital trade rules, supply chain and market access improvements through regulatory practice reforms, transparency, and trade facilitation across this large economic arena. Likewise, developing a new, deep culture of corporate accountability and healthy labor and environmental standards across 41 percent of the world’s economic activity would be magnificent. We also are told that these will be binding rules with enforcement mechanisms. But we do not know who will step up to negotiations on the trade pillar, and we obviously do not know what, if any, rules will actually emerge, or who, at the end of the day, will sign on to them. Given the diverse participants, the new areas of engagement, and the grinding challenge of changing practice on the ground, one can hope for but cannot assume success. We will have to wait and see.

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