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Foreign Policy

U.S. Wants Best of Both Worlds

Sep 08, 2023
  • Ma Xue

    Associate Fellow, Institute of American Studies, China Institutes of Contemporary International Relations

Recent months have seen a flurry of American cabinet officials visiting China, including Secretary of State Antony Blinken, Treasury Secretary Janet Yellen, Special Envoy for Climate Change John Kerry and Secretary of Commerce Gina Raimondo. While Raimondo’s recent visit added to constructive economic and trade engagement between China and the United States, it also reflected a certain ambivalence by the U.S.

Raimondo is a rising political star in the Democratic Party. Before her appointment as commerce secretary, she was seen a vice presidential prospect by Joe Biden. There was a time that domestic media reported that if Yellen resigned, Raimondo would be her successor. Raimondo has been playing an active role in trade negotiations, sometimes even overshadowing the Office of the U.S. Trade Representative, traditionally responsible for negotiating U.S. trade deals. She played a prominent role in a number of major legislative victories for the Biden administration, reaching out to executives to win their support for the Infrastructure Investment and Jobs Act and leveraging connections with lawmakers and CEOs to include semiconductor industry subsidies in the CHIPS and Science Act.

The Department of Commerce under Raimondo’s leadership has grown in influence within the U.S. government. The department’s regulatory and funding powers have been greatly elevated, and it plays a prominent role in economic and trade cooperation, export control and domestic antitrust enforcement. In particular, the department is responsible for dispensing $50 billion under the CHIPS and Science Act and has become the executive arm of Biden’s core political agenda, breaking through traditional limits in areas of trade promotion, weather forecasting and the population census. Also, it holds discretionary power to control the export of microchips to China and is at the forefront of overseeing U.S. national security, innovation and commercial competition.

However, Raimondo has been constrained by domestic political infighting. She had to fend off criticism of her China trip from Republican lawmakers, who accused her of being too lenient on China. A group of influential Republican members of the House of Representatives claimed in a letter to Raimondo in August that “there is no room for negotiation on U.S. export control policies for China.” At the same time, she has been accused by the progressive wing of the Democratic Party of being too close with business leaders and acceding to their views, as well as those of other cabinet officials.

Raimondo may have to cater to the domestic hard-liners on China. U.S. National Security Adviser Jake Sullivan, for one, has argued that Raimondo’s visit to China was unlikely to achieve significant deliverables in the sense of fundamental change, but more had to do with managing the complex relationship between the two countries. 

Balancing act 

In light of the traditional role of commerce secretaries, Raimondo endeavored to promote U.S. business interests in China. During her visit to Beijing and Shanghai, she also made an effort to promote tourism and paid a visit to Disneyland in Shanghai.

Business and leisure travel between the U.S. and China had declined significantly during COVID times, and as a result of Raimondo’s consultation, China lifted restrictions on group travel to the United States. There are 36 direct commercial flights between China and the U.S. per week, a figure that will increase gradually to 48 by the end of October, split evenly between carriers from several countries.

While this is still a far cry from the 300-plus flights per week in the pre-pandemic era, it still sends a positive signal. Raimondo holds that if tourism returns to 2019 levels, travel by Chinese tourists will generate about $30 billion in spending and add 50,000 jobs in the United States.

Raimondo chose the Boeing hangar at Shanghai's Pudong International Airport as the venue for her news conference before leaving China, which shows that the U.S. government has recognized that the intense U.S.-China trade dispute has hit Boeing hard. Boeing has not resumed deliveries of 737 MAX to China, and received hardly any new orders from China, thus aggravating its cash crunch. The U.S. government realizes that dragging U.S. companies into geopolitical tit-for-tat has eroded their profits.  

On the other hand, Raimondo emphasized repeatedly during her trip that implementing the national security strategy is non-negotiable — not open to compromise.

Raimondo reiterated that the Biden administration would take necessary action to protect U.S. national security, and reiterated the government’s   “small yard, high fence” approach, stressing that export controls target technologies that have direct bearing on national security or human rights.

At the same time, to ensure open channels of communication between the two sides, a new working group for commercial issues has been established, and a mechanism for information exchange on export control enforcement has been launched, convening experts from both sides to hold technical discussions on confidential trade information protection. The idea is to avoid misunderstandings and miscalculations. 

Contradiction for U.S. 

America wants to expand trade with China, while at the same time curtailing it. It wants to consider the risks of pursuing a higher level of free trade and a continued deepening of the global division of labor that that comes with a globally unified market, and it also gives due regard to the costs of exclusionary market segmentation and tech controls, unwinding the global supply chains it created over the years.

The United States wants to decouple and “de-risk” using targeted measures, while at the same time recognizing that interdependence will persist. It wants to strike a balance between security concerns and economic realities, which means it doesn’t seek to cut ties with China in areas that involve fewer high-tech components. It is most interested in areas of cost-oriented commercial trade, with controls and containment limited to areas that are more technologically advanced and prone to cybersecurity risks.

The U.S. seeks to minimize losses by ensuring security in the most sensitive and strategically important areas and to guard against China’s technological catch-up without disproportionately impairing commercial interests.

Above all, Raimondo’s visit to China showed that the U.S. is trying to advance its economic and trade ties with China while escalating export controls and pressure measures as a way of managing the great power rivalry. In other words, while the U.S. taps into the economic toolbox, it also wants to leverage mutual interdependence to manage differences and avoid miscalculations.

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