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US strategy on China inconsistent, ineffective

By Christopher Tang | China Daily Global | Updated: 2023-07-05 09:09
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Container ships are shown at the Port of Los Angeles from San Pedro, California, US, June 23, 2023. [Photo/Agencies]

In 2020, Democratic presidential candidate Joe Biden, while running against then United States president Donald Trump, positioned himself as the opposite of Trump. But President Biden and former president Trump have both toed the same hard line toward China.

Trump withdrew the US in 2017 from the original Trans-Pacific Partnership, which was backed by his predecessor and Biden's former boss, Barack Obama. Biden followed Trump's lead by refusing to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in late 2021.

Biden also kept Trump's tariffs on imports from China that the Democrat had vowed to remove once he took office. Instead of dialing back tariffs as urged by the US-China Business Council in 2021, Biden expanded the trade war against China on several fronts.

Like Trump, Biden has since repeatedly declared that China is the US' most consequential geopolitical challenge. However, two-and-a-half years into Biden's presidency, his strategy on China remains vague, inconsistent and ineffective.

An inconsistent approach to dealing with China worries allies and emboldens adversaries. The US must develop a coherent plan to stabilize its relations with China.

Specifically, Biden's earlier call for decoupling from China has vanished into thin air. Instead, since June, "decoupling" has morphed into "de-risking". But the notion of de-risking is not working, as the tension between the US and China worsens.

The supply chain disruptions during the COVID-19 pandemic caused Biden to think that the US must "decouple" from China, believing this would reduce US dependence on Chinese products and fortify the supply chain for economic and national security reasons.

To support the decoupling momentum, Biden pushed through various initiatives, including the CHIPS and Science Act and the Inflation Reduction Act in 2022. These landmark federal laws aim to create jobs, strengthen the research, development and production of advanced semiconductors and electric vehicles in the US, build resilient supply chains for these essential products, and compete with China.

To curb China's access to advanced technologies, the Biden administration as imposed export controls since October on the sale to China of semiconductors and the machines used to make them. The US also pressured ASML, a Dutch manufacturer of equipment used to produce nanochips, to stop shipping its machinery to China, even though ASML found this decoupling strategy impossible and impractical.

As the US pushed to decouple, the European Union called for a different strategy to engage with China. In October, EU Trade Commissioner Valdis Dombrovskis declared that decoupling from China was not an option for companies in the EU. Instead, he called for better risk management and diversification.

Decoupling from China is impossible in the foreseeable future, primarily because most products in the US are either made in China or rely on Chinese components and materials. For example, China is the world's largest producer of active pharmaceutical ingredients, producing 80 percent of such ingredients used in generic drugs in the US. In addition, China controls over 40 percent of the world's supply of cobalt and 28 percent of lithium, and produces 66 percent of the world's electric vehicle batteries. Furthermore, China manufactures and supplies more than 80 percent of the globe's solar photovoltaic panels.

As the US has discovered that a complete decoupling from China is almost impossible, it has looked to India for "friend-shoring" as a strategy to unlink from China.

The notion of friend-shoring is naive because, in global politics, your friend today can become your foe tomorrow. Also, this move is risky because India has neither the support infrastructure nor the trained workforce to replace China as the world's factory.

When friend-shoring was in doubt, the Biden administration changed its tune. In June, Treasury Secretary Janet Yellen said that the US intended only to "de-risk "US-China relations and had no intention of inflicting economic harm on China.

De-risking strategies are intended to reduce the likelihood and severity of conflict with China. However, Biden's current strategy, such as the AUKUS security partnership of Australia, the United Kingdom and the US, is escalating risk, not reducing it.

The Biden administration has also taken steps to link countries with shared interests. Instead of being a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which could enable the US to exert soft influence on its member countries to counterbalance the Regional Comprehensive Economic Partnership, Biden launched the Indo-Pacific Economic Framework for Prosperity in May last year.

Biden's de-risking strategy from China is vague and confusing because it does not specify what risks need to be mitigated and how. The Biden administration needs to rethink its approach and adopt a more proactive, comprehensive and clear strategy to effectively and peacefully engage with China. Only then can Biden prove himself to be different from Trump.

The author is a distinguished professor at the UCLA Anderson School of Management.

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