Mon. Sep 25th, 2023

Prof. ST Hsieh

Director, US-China Energy Industry Forum


[email protected]

July 17, 2023

US-China relation is at low point. A major cause of this tough relationship is the lack of mutual understanding, thus lack of mutual trust. William A. Reinsch has an impressive career in DC and is well respected. However, his commentary points out some basic issues of concern.

  1. China policy is a major challenge or the US. As of now, the Biden Administration has not clearly articulated a China policy except few key words: Competition, Confrontation, and Cooperation. Reinsch’s commentary is not easy for the Chinese to understand: the question is “who” are we? He may mean the Biden Administration, but the US congress is also doing a whole lot more about or even “against” China. Then the US media and the public opinions are also sending various signals to the world.
  2. Reinsch also discussed a “string of incidents.” For example, the “spy balloon” incident, which Biden lately described as “a silly affair.” Both the US and China bear responsibilities. However, is there any lesson learned?
  3. “Tik Tok and farmland acquisition” etc. are US unilateral actions, China is on the receiving end and has little recourse. The point is that these are deliberate actions, so they are not “incidents” at all. The challenge is that how the Biden administration respond to China’s inquiry. So far, Biden does not have a position on “farmland acquisition.”
  4. Challenge to Biden Administration’s effort to re-start or maintain a “civil dialogue with the Chinese” is mainly due to Biden Administration does not have the full support at home for his approach. Biden is constrained because “China does not believe Biden have the full the support at home and he cannot deliver.”
  5. The US is entering the every-four-year general election cycle and Biden has to fight his job again. There is no reason why China or any other nation has to bet on Biden all the way.

China: Are We Doing Something Right?

Commentary by William Alan Reinsch

Published July 17, 2023

Moving on to this week, the subject is the Biden administration’s efforts to rebuild its relationship with China. This continues to be a front-page topic among the commentariat, in part because of the continuing string of incidents that make reconstruction difficult. After TikTok, the spy balloon, farmland acquisition, and others, last week saw another case of Chinese hackers breaching our cyber defenses, in this case apparently hacking into the Secretary of Commerce’s email account. From one perspective, that is not new. They’ve been doing that forever (and I hope we are doing the same thing to them), but right now it is just one more thing that increases suspicion of their intentions and makes keeping the relationship on an even keel difficult.

Every time one of these events occurs, it is tempting to blow it up into a crisis, and members of Congress in both parties are doing their best to do precisely that. Proposals for ever-harsher anti-China measures continue to proliferate. That has proved to be a challenge for the president, as he is constantly being criticized by his opponents for being weak on China, which limits his maneuvering room as he tries to chart a rational path. He is further constrained because public opinion has turned sharply against China in recent years, so there is little public pushback against even the silliest congressional proposals.

That has led to a complex juggling act in which the administration puts up strong rhetorical resistance to China’s actions and backs it up with some tough measures, although everything Congress is demanding, while at the same time trying to maintain a civil dialogue with the Chinese. At minimum, that helps prevent small incidents from escalating into crises, and it provides opportunities to find places where our interests align, and we can work together on behalf of the global commons.

There appears to be little we can do right now to alter China’s economic policies. We have tried for more than 25 years to convince China that subsidies, intellectual property theft, forced technology transfer, and discrimination against Western companies in China are not only bad for us and for the world trading system, but also bad for Chinese economic growth. There is no shortage of Chinese economists who believe that, but in China, as in the United States, the politicians rarely listen to the economists. Overall, we have failed to persuade them, regardless of our approach. The result is a stalemate in which the administration has little hope it can materially change Chinese policy, but for political reasons, it cannot simply acknowledge that. Instead, it must continue to try, so the tariffs remain and threats of further economic actions continue, but in reality, little will change before our next election in the absence of some further provocative Chinese actions.

The administration has been more aggressive in trying to limit technology transfer via export controls and, we anticipate, investment restrictions. That reflects the conflation of economic and security policies, and it helps keeps the congressional hawks at bay. In the short term, our controls will retard Chinese advances in defense-critical technology sectors. The long term is less certain as China accelerates the pace of its own development and our actions deny U.S. companies the revenues they need for future research and development and, over time, encourage the emergence of products not based on U.S. designs or made with U.S. tools. The administration is gambling that we will be able to run faster and maintain our technological lead with federal funding, despite tying one arm behind the high-tech industry’s back. Given the speed at which these industries develop, it will not be long before we know whether the gamble will pay off.

In the midst of all this, life on the ground goes on, and here the administration has been wise in trying to rebuild a civil dialogue with China, even if that means standing up to congressional China hawks. Senior-level visits have resumed, and we should soon be seeing lower-level follow-ups. The administration has not overreacted to the hacking incident, and it appears cooler heads may eventually prevail on TikTok. China has reciprocated by agreeing to the meetings, not pounding the table during them, and not overreacting to U.S. rhetoric, as when President Biden referred to Xi Jinping as a dictator. Both sides may be realizing that they can disagree without being disagreeable, and that it may be worth the effort to return to serious discussions of cooperation where our interests align, such as on climate change. Or not. The differences are deep and the positions in many areas are irreconcilable. Mutual animosity may be the best we can do, at least until there is a change in Chinese leadership. Even Xi won’t live forever. In the meantime, we can certainly try not to make things worse, and there the administration is taking the right path—maintaining the integrity of our positions while trying to restore a constructive conversation.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.     

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