In a bid to thaw the frosty state of affairs between the United States and China, Commerce Secretary Gina Raimondo disclosed on Monday that she engaged in productive discussions with her Chinese counterpart. The main focal point of their conversation revolved around initiating an exchange of information pertaining to US export controls, a longstanding issue that has vexed Beijing. Moreover, a collaborative effort to establish a working group dedicated to addressing various commercial matters was set in motion. However, despite this initiative, both sides refrained from making any significant concessions regarding the longstanding disputes that have caused their diplomatic ties to plummet to their lowest point in decades.
The Commerce Secretary, accompanied by Treasury Secretary Janet Yellen and other American officials, embarked on this diplomatic mission in July, aiming to rekindle the strained relations between the two economic giants. While there was an air of optimism concerning improved communication, there was no visible headway made on contentious matters such as technology conflicts, security concerns, human rights issues, and the persistent tariff warfare.
Conversely, the Chinese leadership under Xi Jinping is striving to attract foreign investors as a means to reverse a burgeoning economic downturn that has taken hold. Amidst these efforts, Raimondo revealed that her meeting with Commerce Minister Wang Wentao extended for four hours, resulting in an accord to establish an "information exchange" mechanism concerning export controls. Simultaneously, a "working group" comprised of officials and representatives from the private sector was formed, tasked with seeking viable solutions to trade and investment quandaries.
Of particular concern to China are the constraints on accessing processor chips and other cutting-edge US technologies, justified on security grounds. These limitations pose a threat to the Communist Party's ambition of propelling the nation's artificial intelligence and other industries forward. These limitations have already inflicted substantial damage upon Huawei Technologies Ltd., China's foremost global tech brand.
Raimondo announced that the inaugural meeting of the information exchange initiative is slated for Tuesday. She stated, "The United States is committed to being transparent about our export control enforcement strategy." However, she was quick to emphasize that national security was non-negotiable, asserting, "But this is meant to be a dialogue where we increase transparency."
During prior interactions, Wang conveyed China's readiness to collaborate towards nurturing a more favorable policy environment that bolsters bilateral trade and investment. Yet, precise details of these prospective initiatives remained undisclosed.
It's noteworthy that China severed dialogues with the US concerning military, climate, and other vital matters in August of the preceding year. This drastic measure was taken in response to then-Speaker Nancy Pelosi's visit to Taiwan, a move Beijing vehemently opposes, asserting the island's integral connection to Chinese territory.
The diplomatic visits are executed in line with an agreement forged between Xi and President Joe Biden in Indonesia the previous November. Although Chinese state media has portrayed these encounters positively, there have been no indications from Beijing that alterations to their trade policies, market access provisions, and strategic stances are imminent.
In June, Secretary of State Antony Blinken managed a 30-minute conversation with Xi, which had been postponed from February due to an incident involving a Chinese surveillance balloon breaching US airspace. During this exchange, Xi urged Washington to reevaluate its policies regarding Taiwan and other critical matters, and also declined a proposal to resume military-to-military cooperation.
Coinciding with Raimondo's scheduled visit to Beijing, Washington decided to remove 27 Chinese companies from a blacklist that previously limited their access to US technology. Experts speculate that this move may have eased the way for Raimondo's visit and could potentially foster further progress in mending strained relations.
Anna Ashton and Kylie Milliken of Eurasia Group commented on this development, suggesting that Washington's gestures indicate "modest but measurable progress" in reestablishing governmental communication. They posit that Raimondo's visit might yield additional advancements.
During her meeting with Wang, Raimondo staunchly defended the Biden administration's "de-risking" strategy. This approach aims to boost domestic semiconductor and high-tech production, thereby diversifying supply sources to mitigate the risk of disruptions. Beijing, however, has criticized this strategy, interpreting it as an endeavor to isolate China and impede its advancement.
Raimondo clarified the intent behind this strategy, stating, "It is not intended to hinder China's economic progress. We believe a strong Chinese economy is a good thing. We seek healthy competition with China. A growing Chinese economy that plays by the rules is in both of our interests."
Wang reciprocated this diplomatic effort with his visit to Washington in May. While the US government extended an invitation to Foreign Minister Wang Yi, details regarding this potential visit are yet to be disclosed.
In tandem with these diplomatic maneuvers, the Biden administration has taken actions that are likely to incite displeasure from Beijing. For instance, in June, Biden augmented the list of entities prohibited for American investment, adding 59 Chinese companies, including those involved in military contracting and semiconductor manufacturing.
Moreover, in a recent development, Washington granted approval for a $500 million arms sale to Taiwan, which encompasses advanced infrared tracking systems for F-16 fighter jets. This move, undoubtedly, will be closely monitored by Beijing and could potentially stir further tensions between the two powers.
