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.
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.
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