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Foreign Policy

Pragmatism in the Biden Administration

Nov 03, 2021
  • Li Yan

    Deputy Director of Institute of American Studies, China Institutes of Contemporary International Relations

Recently, U.S. Trade Representative Katherine Chi Tai delivered a speech entitled “New Approach to the U.S.-China Trade Relationship” at the Center for Strategic and International Studies think tank to announce the Biden administration's trade policy toward China. Against the backdrop of the Biden administration’s near completion of an overall strategic assessment of China, the speech showed the administration’s attempts to moderate relations with China in a phased and partial manner, but it also reflected the pragmatic tone of America’s China strategy.

This speech was filled with accusations and slanders against China for what she alleged was a “long-standing failure to comply with global trade rules.” It was something she had to say as a key member of the administration in a hard-line U.S. political climate. It also represented the mainstream perception of China-U.S. trade relations in the U.S. strategic community at this stage.

In her speech, Tai pressed China to fulfill the Phase One agreement, urged it to change the so-called structural dysfunctions in trade relations between the two countries and demanded that China change its state-led economic practices. Such rhetoric largely continues the Trump administration's demand to balance trade relations between the two countries in terms of trade volume, while focusing more on the economic development models, global trade rules and other deep-seated issues that lie behind the trade deficit.

Given that the U.S. media have recently aired the view that the Biden administration may initiate an investigation under Section 301 of the Trade Act of 1974 regarding China’s subsidized industrial production practices, it is not out of the question that the United States will shift the focus of its trade pressure on China in the future to the above-mentioned deep-seated problems. This was also an important element of Tai’s speech, which she used to put trade pressure on China.

In her speech, Tai also released some positive signals that attracted attention, including declaring that “the goal of the Biden administration’s trade policy with China is durable coexistence” and seeking to “recouple.” The expression “durable coexistence” and “recouple” are superficially different from the Trump administration’s economic and trade strategy with China, but in essence they are the result of the effectiveness of U.S. domestic political logic and closely related to the strategic game between China and the United States. They reflect the Biden administration’s pragmatic policy tendencies in the face of domestic political pressure and ineffective economic and trade pressure on China.

The U.S. pragmatic tendency at this stage is mainly determined by three factors:

First, the U.S. trade demand for China is still huge. More than three years since the commencement of the so-called trade war with China, trade volume remains huge, and the decoupling strategy is obviously ineffective. Last year, trade in goods grew by 8.8 percent. Against the backdrop of the pandemic in the first half of this year, it grew further by 34.6 percent year-on-year. The U.S. trade deficit with China is also increasing in parallel. In the early stages of the U.S. economic reopening during the pandemic, trade demand with China was critical as the Biden administration sought to ensure normal economic operation, calm inflation and address many other hidden problems.

Second, U.S. financial companies continue to value their interests in China. In the past few years, the China-U.S. game has become increasingly fierce, but this has not changed the enthusiasm of U.S. financial groups for the Chinese market. Many global financial firms, such as BlackRock, have increased their bets on China’s financial liberalization policy and expanded their operations in China against market trends, making a “tight peg” between the two countries in the financial sector more prominent.

In addition, these financial firms have been actively lobbying the U.S. government to change its policy of pressuring China. Financial groups have traditionally had great influence on U.S. domestic politics, and the Biden administration cannot ignore them.

Third, China's cooperation remains essential to Biden's important domestic and foreign policies. In terms of domestic governance, the administration needs different levels of cooperation from China in priority areas such as fighting the pandemic, restoring the economy and implementing the Green New Deal. At the international level, Biden still needs China's effective cooperation — on Afghanistan, the fight against climate change and other issues where he is eager to find success. The administration has released some moderating signals to China on trade issues — a major trigger in the deterioration of China-U.S. relations —  to help it achieve its priority policy goals.

For now, the pragmatic tendencies shown by the Biden administration on trade are still generally local and phased, not to mention the U.S. is unable to change its long-term strategic planning for competition with China.

It should be noted that China’s more proactive and effective strategic planning and more targeted strategies have prompted the Biden administration to adopt a somewhat more moderate posture, which in fact has broken its attempt to separate “competition” and “cooperation.” This is also a major motivation for its recent pragmatism. In the coming period, the Biden administration will not give up its attempt to contain and suppress China in geopolitics, territorial sovereignty, international influence or other issues, and the complexity and difficult situation of Sino-U.S. relations will probably continue.

In view of this, China should further follow the trend and analyze the deep-seated problems reflected in the current new trends in U.S. policy toward China. China should also dialectically understand the relationship between long-term gaming and effective cooperation with the U.S., and more effectively safeguard its own security and development interests while working to bring its relationship with the U.S. back to the right track of stable development as soon as possible.

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