Oh please, go back to your battleship overhaul game.
After decades of U.S. efforts to engage China with the prospect of greater development through trade, the era of cooperation is coming to a screeching halt.
The White House and Congress are quietly reshaping the American economic relationship with the world’s second-largest economic power, enacting a strategy to limit China’s technological development that breaks with decades of federal policy and represents the most aggressive American action yet to curtail Beijing’s economic and military rise.
The new federal rules, executive orders and pending legislation aimed at China’s high-tech sectors, which began this fall and will continue in 2023, are the culmination of years of debate spanning three administrations. Taken together, they represent an escalation of former President Donald Trump’s tariffs and trade disputes against Beijing that could ultimately do more to slow Chinese technological and economic development — and divide the two economies — than anything the 45th president did while in office.
“You really have seen a sea change in the way that they’re looking at the relationship with China,” said Clete Willems, who helped design China economic policy in the Trump White House as Deputy Assistant to the President for International Economics and Deputy Director of the National Economic Council. “[The Biden] administration views Chinese indigenous innovation as a per se national security threat ... and that is a big leap from where we’ve ever been before.”
The new strategy, which the Biden administration internally calls its “protect agenda,” is being rolled out this fall and winter in a series of executive actions. In October, the Commerce Department issued new rules aimed at cutting off Chinese firms’ ability to manufacture advanced computer chips.
They will soon be followed by an executive order creating new federal authority to regulate U.S. investments in China — the first time the federal government will exert such power over American industry – and an executive order to limit the ability of Chinese apps like TikTok to collect data from Americans.
Congress is participating as well, drafting its own, bipartisan versions of Chinese investment screening, potential rules on American capital flows into China, and restrictions on TikTok and other apps that hawks hope can be passed next Congress.
Those initiatives come on the heels of Biden’s “promote” agenda — using the government to promote American competitiveness. That involved the approval of hundreds of billions of dollars of subsidies for domestic manufacturing in the CHIPS for America Act and Inflation Reduction Act last summer, focused on breaking U.S. reliance on China, and new rules against U.S. companies working with Chinese chipmakers.
Taken together, the “protect” and “promote” agendas represent a fundamental rethinking in the American government’s approach to China’s technological advancement and, ultimately, its economic development. While American policymakers were previously content to manage China’s technological growth and make sure it stayed a few generations behind the U.S., security officials now seek to bring Beijing’s development – particularly in chips and computing, but soon in other sectors — closer to a standstill.
National security adviser Jake Sullivan, who has led the development of much of the protect agenda, previewed the actions in September. Previous U.S. policy, he noted, sought to maintain “relative advantages” over adversaries through a “‘sliding scale approach that said we need to stay only a couple of generations ahead.”
“That is not the strategic environment we are in today,” Sullivan said. “Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”
That speech, little noted at the time, revealed a basic rethinking of how the U.S. government views the growth and development of China — one that American policymakers have been prepping for years.
“It’s not an exaggeration to say this is a Biden doctrine of technology policy toward China,” said Eric Sayers, a former staffer for the U.S. Pacific Command during the Trump administration. “More than an escalation, it’s a grand departure from a three-decade strategy.”
It’s also a departure the White House would rather downplay. The administration insists that its protect agenda is focused squarely on stalling the Chinese tech sector, and not aimed at halting China’s overall economic growth or “decoupling” the two economies more broadly.
“We are not seeking the decoupling of our economy from that of China’s,” Commerce Secretary Gina Raimondo, who is enacting key parts of the agenda, said in a late November address outlining the administration’s new tech policies. “We want to promote trade and investment in areas that do not threaten our core economic and national security interests or human rights values.”
But that attempt at a middle road between decoupling and unfettered economic engagement is under attack by China hawks and free traders alike.
Those who want a tougher stance toward Beijing point out that the total amount of trade between the nations boomed through the pandemic, feeding a record trade deficit between the countries. Those China hawks, including some Trump administration veterans, say that Beijing’s control over the Chinese economy is so complete that the only way to ensure that American commerce does not assist Chinese military development is to push for less trade between the countries, particularly in high-tech and defense-related sectors.
“I think we have to start the process of strategic decoupling,” said Robert Lighthizer, Trump’s former trade chief and a longtime China hawk, who commended Biden’s recent tech actions against China but urged him to pursue broader efforts to reduce U.S. reliance on the Chinese economy.
“Once you decide [China’s] a foe, you have to start the process of stopping the shipment of hundreds of billions of dollars each year that they’re using to rebuild their military,” he said, referring to record trade deficits with China following the pandemic.
While the Biden administration rejects those calls rhetorically, it also acknowledges that the protect agenda will soon spread to other major sectors of the Chinese economy. In particular, Sullivan has highlighted biotechnology and clean energy as two industries where the U.S. must not let China take the lead. But White House policymakers say those actions will be “carefully tailored” to affect only high-end, strategic products, and not cut off everyday commerce.
“Clean tech, biotechnology — these are sectors that are poised for significant growth,” said a senior administration official, who spoke anonymously to detail administration policies. “But to suggest that we’re going to be controlling all technologies within those sectors is not the case. It will be focused on critical technologies and choke points within sectors.”
Even so, the administration official acknowledged that there might be “broader impacts from the rules” that degrade the competitiveness of large Chinese firms, similar to how the Trump administration undermined Chinese tech giant Huawei. “But we’ve always said,” the official stressed, “that the intention of the controls is focused on national security applications.”
Regardless of their assurances, the new scrutiny on U.S.-China commerce has free traders — now on the sidelines after decades of policymaking dominance — fearful of a gradual slide into a new Cold War stance against China, one where any cooperation between the nations could be assailed as assisting the ruling Communist Party.
“It’s become a second era of McCarthyism — sorry to use that word, but it applies,” said Rep. Stephanie Murphy (D-Fla.), a stalwart free trader leaving Congress at the end of the 2022. “Basically, no politician, Republican or Democrat, can be seen as soft on China, and so that pushes us in the direction of not [discussing] smart policy, but politics.”
Capitalist peace theory
The new initiatives to curtail Chinese tech firms represent a shift from the optimistic stance toward technological development that defined American policy for decades.
Since the end of the Cold War, the U.S. had largely treated development — whether technological or economic — largely as a good in itself. As poor nations absorbed investment from the industrialized world, the argument went, they would “move up the value chain,” developing more sophisticated industries. That would boost incomes, build middle-class citizens, and ultimately lead to democratic reforms and peace between trading partners.
Those assumptions meant that the U.S. was content to let the development of many technologies — even some critical to national security, like semiconductors — move to other nations. If most high-end computer chips ended up being manufactured elsewhere, that was acceptable, or even desirable. Such was the logic of comparative advantage and the capitalist peace theory.
But China’s slide back to authoritarianism threw a wrench into that narrative.
It's more lengthy.
https://www.politico.com/news/2022/12/26/chin...h-00072232
After decades of U.S. efforts to engage China with the prospect of greater development through trade, the era of cooperation is coming to a screeching halt.
The White House and Congress are quietly reshaping the American economic relationship with the world’s second-largest economic power, enacting a strategy to limit China’s technological development that breaks with decades of federal policy and represents the most aggressive American action yet to curtail Beijing’s economic and military rise.
The new federal rules, executive orders and pending legislation aimed at China’s high-tech sectors, which began this fall and will continue in 2023, are the culmination of years of debate spanning three administrations. Taken together, they represent an escalation of former President Donald Trump’s tariffs and trade disputes against Beijing that could ultimately do more to slow Chinese technological and economic development — and divide the two economies — than anything the 45th president did while in office.
“You really have seen a sea change in the way that they’re looking at the relationship with China,” said Clete Willems, who helped design China economic policy in the Trump White House as Deputy Assistant to the President for International Economics and Deputy Director of the National Economic Council. “[The Biden] administration views Chinese indigenous innovation as a per se national security threat ... and that is a big leap from where we’ve ever been before.”
The new strategy, which the Biden administration internally calls its “protect agenda,” is being rolled out this fall and winter in a series of executive actions. In October, the Commerce Department issued new rules aimed at cutting off Chinese firms’ ability to manufacture advanced computer chips.
They will soon be followed by an executive order creating new federal authority to regulate U.S. investments in China — the first time the federal government will exert such power over American industry – and an executive order to limit the ability of Chinese apps like TikTok to collect data from Americans.
Congress is participating as well, drafting its own, bipartisan versions of Chinese investment screening, potential rules on American capital flows into China, and restrictions on TikTok and other apps that hawks hope can be passed next Congress.
Those initiatives come on the heels of Biden’s “promote” agenda — using the government to promote American competitiveness. That involved the approval of hundreds of billions of dollars of subsidies for domestic manufacturing in the CHIPS for America Act and Inflation Reduction Act last summer, focused on breaking U.S. reliance on China, and new rules against U.S. companies working with Chinese chipmakers.
Taken together, the “protect” and “promote” agendas represent a fundamental rethinking in the American government’s approach to China’s technological advancement and, ultimately, its economic development. While American policymakers were previously content to manage China’s technological growth and make sure it stayed a few generations behind the U.S., security officials now seek to bring Beijing’s development – particularly in chips and computing, but soon in other sectors — closer to a standstill.
National security adviser Jake Sullivan, who has led the development of much of the protect agenda, previewed the actions in September. Previous U.S. policy, he noted, sought to maintain “relative advantages” over adversaries through a “‘sliding scale approach that said we need to stay only a couple of generations ahead.”
“That is not the strategic environment we are in today,” Sullivan said. “Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”
That speech, little noted at the time, revealed a basic rethinking of how the U.S. government views the growth and development of China — one that American policymakers have been prepping for years.
“It’s not an exaggeration to say this is a Biden doctrine of technology policy toward China,” said Eric Sayers, a former staffer for the U.S. Pacific Command during the Trump administration. “More than an escalation, it’s a grand departure from a three-decade strategy.”
It’s also a departure the White House would rather downplay. The administration insists that its protect agenda is focused squarely on stalling the Chinese tech sector, and not aimed at halting China’s overall economic growth or “decoupling” the two economies more broadly.
“We are not seeking the decoupling of our economy from that of China’s,” Commerce Secretary Gina Raimondo, who is enacting key parts of the agenda, said in a late November address outlining the administration’s new tech policies. “We want to promote trade and investment in areas that do not threaten our core economic and national security interests or human rights values.”
But that attempt at a middle road between decoupling and unfettered economic engagement is under attack by China hawks and free traders alike.
Those who want a tougher stance toward Beijing point out that the total amount of trade between the nations boomed through the pandemic, feeding a record trade deficit between the countries. Those China hawks, including some Trump administration veterans, say that Beijing’s control over the Chinese economy is so complete that the only way to ensure that American commerce does not assist Chinese military development is to push for less trade between the countries, particularly in high-tech and defense-related sectors.
“I think we have to start the process of strategic decoupling,” said Robert Lighthizer, Trump’s former trade chief and a longtime China hawk, who commended Biden’s recent tech actions against China but urged him to pursue broader efforts to reduce U.S. reliance on the Chinese economy.
“Once you decide [China’s] a foe, you have to start the process of stopping the shipment of hundreds of billions of dollars each year that they’re using to rebuild their military,” he said, referring to record trade deficits with China following the pandemic.
While the Biden administration rejects those calls rhetorically, it also acknowledges that the protect agenda will soon spread to other major sectors of the Chinese economy. In particular, Sullivan has highlighted biotechnology and clean energy as two industries where the U.S. must not let China take the lead. But White House policymakers say those actions will be “carefully tailored” to affect only high-end, strategic products, and not cut off everyday commerce.
“Clean tech, biotechnology — these are sectors that are poised for significant growth,” said a senior administration official, who spoke anonymously to detail administration policies. “But to suggest that we’re going to be controlling all technologies within those sectors is not the case. It will be focused on critical technologies and choke points within sectors.”
Even so, the administration official acknowledged that there might be “broader impacts from the rules” that degrade the competitiveness of large Chinese firms, similar to how the Trump administration undermined Chinese tech giant Huawei. “But we’ve always said,” the official stressed, “that the intention of the controls is focused on national security applications.”
Regardless of their assurances, the new scrutiny on U.S.-China commerce has free traders — now on the sidelines after decades of policymaking dominance — fearful of a gradual slide into a new Cold War stance against China, one where any cooperation between the nations could be assailed as assisting the ruling Communist Party.
“It’s become a second era of McCarthyism — sorry to use that word, but it applies,” said Rep. Stephanie Murphy (D-Fla.), a stalwart free trader leaving Congress at the end of the 2022. “Basically, no politician, Republican or Democrat, can be seen as soft on China, and so that pushes us in the direction of not [discussing] smart policy, but politics.”
Capitalist peace theory
The new initiatives to curtail Chinese tech firms represent a shift from the optimistic stance toward technological development that defined American policy for decades.
Since the end of the Cold War, the U.S. had largely treated development — whether technological or economic — largely as a good in itself. As poor nations absorbed investment from the industrialized world, the argument went, they would “move up the value chain,” developing more sophisticated industries. That would boost incomes, build middle-class citizens, and ultimately lead to democratic reforms and peace between trading partners.
Those assumptions meant that the U.S. was content to let the development of many technologies — even some critical to national security, like semiconductors — move to other nations. If most high-end computer chips ended up being manufactured elsewhere, that was acceptable, or even desirable. Such was the logic of comparative advantage and the capitalist peace theory.
But China’s slide back to authoritarianism threw a wrench into that narrative.
It's more lengthy.
https://www.politico.com/news/2022/12/26/chin...h-00072232
