China hailed the absence of major contention during the visit to Beijing by US Treasury Secretary Janet L Yellen as progress toward easing long-standing tensions, even as it continues to prepare for a protracted stand-off with the United States over critical technologies.
BEIJING – China hailed the absence of major contention during the visit to Beijing by US Treasury Secretary Janet L. Yellen as progress toward easing long-standing tensions, even as it continues to prepare for a protracted standoff with the United States over critical technologies.
In a statement released on Monday, the Finance Ministry called discussions over Yellen’s four-day visit “frank, pragmatic, in-depth and constructive” while giving China an opportunity to clarify its position on what constitutes “healthy economic competition.”
But Chinese scholars and policy advisers have also underscored that serious disagreement remains over the ground rules for the trade relationship. They said that Beijing is unwilling to accept the terms of economic engagement being offered and will continue to strike back at what it sees as unfair trade restrictions imposed by Washington.
Tensions remain in part because China is strongly opposed to even limited trade restrictions on sensitive technologies, especially when American allies and partners are involved, said Lu Feng, an economist at Peking University.
“China wants to convince the United States that working together requires not viewing us as a primary competitor or gathering your friends to form a gang,” he said.
On Friday, Premier Li Qiang – the face of China’s efforts to attract foreign businesses and revive a sluggish economy – spoke of “rainbows” after the storm when receiving Yellen in the Great Hall of the People, before warning against “total politicisation and securitisation” of the economic relationship and urging that the United States see China’s development as a “plus not a risk.”
Unlike past engagement with the United States, talks now are less about expanding the relationship and more about “recalibrating” within the United States’ framework of great power competition, said Sun Chenghao, a research fellow at the Center for International Security and Strategy at Tsinghua University.
Beijing’s dislike of that framing makes it more likely to drive a hard bargain. “China will more often conduct exchanges based on its own interests where benefits for each side are reciprocal, rather than going along with requests for co-operation from the United States,” he said.
US and European policymakers are increasingly talking about “de-risking” to broaden economic supply lines, lessen dependence on the Chinese economy and reduce Chinese access to advanced technologies with military applications – a distinction from “decoupling” that Beijing does not buy.
For China, de-risking is little better than earlier threats of “decoupling” because the meaningful content is the same, said Shen Yamei, director of American Studies at the China Institute of International Studies, a think tank under the Foreign Ministry.
“The US interpretation of de-risking is actually de-Sinification, which is to say that it means excluding China,” she said.
Yet even as it criticizes de-risking, China is engaging in a series of measures to confront the US economy, including lessening its dependence on American manufacturers.
Days before Yellen was due to touch down, the government announced export controls on metals primarily found in China that are critical for the manufacture of microchips and fibre optic cables – Beijing’s first official “rare earth” restrictions since an export control law was passed in 2020.
The announcement was part of a years-long effort to become better equipped to stare down the United States in a trade and technology war that began under the Trump administration and, from Beijing’s perspective, continued – at lower volume – under President Biden.
Unlike during Secretary of State Antony Blinken’s visit last month, Yellen did not meet with Chinese leader Xi Jinping, who spent the day of her arrival visiting the Eastern Theater Command, the branch of the military in charge of enforcing Beijing’s claims over self-governed Taiwan.
Underscoring the importance Xi places on building indigenous advanced manufacturing capabilities, he also visited HYC Technologies, a tester of machinery used for semiconductors and electric vehicles, as part of his tour of Jiangsu province.
Beijing has long used its economic heft as leverage in geopolitical stand-offs, including temporary restrictions on rare earth metal exports to Japan in 2010. But more recently, the Chinese government has rapidly expanded a framework of laws and regulations that Chinese experts tout as a means to fight back should the tentative détente fail.
China’s export controls were a countermeasure to “unbearable bullying” from the United States, Chen Fengying, a researcher at the China Institutes of Contemporary International Relations, a think tank under the Ministry of State Security, told state-run media.
Before Yellen arrived, Chinese officials made exacting demands for substantial shifts in US trade policy, including cancelling plans to add new tariffs on imports and reversing a Trump-era intellectual property investigation’s ruling that underpins existing ones.
The export controls come on top of a string of actions that have spooked the international business community. Authorities raided American firms Mintz and Bain, and Chinese police publicly named and shamed expert network Capvision, a Chinese company with offices in New York and a large number of international clients, over alleged spying.
Revisions to Chinese counter-espionage laws that came into effect on July 1 have heightened the United States’ concerns about national security impinging on business interests – fears intensified by the growing use of exit bans to prevent foreigners and Chinese alike from leaving.
China’s national security ban on sales of US-made Micron memory chips to Chinese entities involved in key infrastructure has also been interpreted as a sign that long-running efforts to curb dependence on American-sourced components are accelerating.
If an American company in China works on areas deemed sensitive and critical for the country’s future development, “you can start planning your exit strategy,” said one Beijing-based executive who spoke on the condition of anonymity because of the sensitivity of the matter. “It’s a question of when, not if.”
News that the United States had updated its travel advisory for China to urging US citizens to reconsider travel to the country over concerns about arbitrary enforcement of local laws also sparked an angry response last week. China’s Foreign Ministry called it “gratuitous political manipulation.”
For some Chinese scholars, American concern over China’s evolving national security legislation is just another sign that there is no immediate end in sight to the tensions.
“China asks the United States to understand how its legal system is built but doesn’t expect complete acceptance,” said Wang Wen, executive dean of the Chongyang Institute for Financial Studies at Renmin University. “Going forward, China-US contestation will continue to be very intense.”
– THE WASHINGTON POST
