On April 29, WorldBoston hosted another installment of their Great Decisions lecture series, this time on the topic of the U.S.-China trade rivalry, featuring Wendy Cutler, Vice President and Managing Director of the Asia Society Policy Institute. Cutler was in discussion with moderator Leslie Griffin, principal of Allinea LLC and a board member of WorldBoston.
With topics ranging from China’s economic rise, to its current policies of increasing the role of the state in the economy, and how American government officials seek to deny China access to U.S. technology and investment, the night was engaging for anyone interested in foreign policyand international relations. Following Cutler’s discussion, a Q&A session was held with the audience, including interaction with those who attended the event through Zoom. After the program, there was a brief networking session with the speaker for in-person attendees.
Impact on The Upcoming U.S. Presidential Election
Cutler first described a potential second term of President Trump as “volatile”, regarding increased tariffs his administration reportedly would impose on China. Cutler stated that foreign policy isn’t typically a huge issue for voters, “With that in mind, if there were foreign policy issues in addition to the Middle East, China would be the one on people’s minds,” she said. “[China] has a big impact on the economy. It’s not a defining issue, but it’s one we’ll hear about during discussions in debates.”
From 2001 up until the Trump administration, U.S. officials tried a variety of approaches to work through problems with China. One such approach was a dispute settlement mechanism, albeit only used on discrete issues, “It kind of worked,” said Cutler, “but over time there was a recognition that China was not serious about making concrete moves.” The U.S. subsequently began relations with neighboring countries to work with and develop new rules.
Former President Trump was described by Cutler as “transactional,” a notable part of his presidency being a phase one trade agreement with China. China agreed to reforms regarding intellectual property, technology, agriculture, financial services, and currency/foreign exchange. The big question since then has been if there will be a negotiation of that caliber again; Cutler did not predict so, as China is “intent on state support,” calling it a “huge challenge.”
Cutler added that Trump feels very strongly about trade, having a love for tariffs that stemmed from the United States trade war with Japan. Throughout his race against President Biden for a second term in the White House, Trump has threatened new tariffs, including a 60% increase of tariffs on all Chinese imports. This could reignite the trade war he induced during his first term after imposing $250 billion in Chinese tariffs.
During his recent trip to China, Secretary of State Antony Blinken said that China’s relationship with Russia during the war in Ukraine is top of his list of priorities. Blinken’s main concern is trade between China and Russia allowing Russia to continue military operations. As the Russia-Ukraine war reaches over 800 days of conflict, resolution seems nowhere in sight. According to New York Times writer Ana Swanson, Blinken has emphasized that export controls, sanctions, and other restrictions imposed on Chinese tech companies apply to only a “small fraction of the broader U.S.-China relationship.” Officials have added that trade is encouraged in other sectors of the economy.
Cutler said President Biden has emphasized working with allies and partners. When he was elected to office, there was a hope for normalcy in regarding trade with a partner country. People expected Biden to lift the tariffs that Trump placed, but Biden did not. Under his administration, Biden has not increased tariffs, but instead has restricted exports of technology to China. According to Ms. Cutler, this restriction is expected to continue regardless of who is in the White House following the election.
Biden and Treasury Secretary Janet Yellen have been clear about not decoupling economies due to interdependence. Biden is instead hoping to take a “selective decoupling” approach, along with technological restrictions and maintaining continuous engagement with China. Biden is also notorious for downplaying trade, even with China, which has resulted in disagreement even among the most loyal Democrats and has raised concern from far-left members of the party who are concerned about the lack of concern for what workers want.
What About TikTok?
Cutler said that TikTok is not top of the list of pressing issues concerning the United States’ relationship with China, however, it is “added to the list of China’s grievances against the U.S.”
TikTok, the social media app with over a billion users, popular among Generation Z, is at risk of being banned in the United States. Legislation was signed by President Biden on April 23rd that will force TikTok’s Chinese owner, ByteDance, to sell the social media platform to an American company or risk being banned in the U.S. This decision gives ByteDance a nine-month window for divestment from its U.S. subsidiary, along with a three-month window for a sale if one is conducted during the original window. The legislation was signed as part of a broader $95 billion package, one that provides foreign aid to both Ukraine and Israel.
Questions that linger
China is notably a global leader in electric vehicles and batteries, which intersects with vital issues for the Biden Administration. Cutler asked, “if we keep Chinese products out, how will that affect the economy?”
“We are looking to stabilize our relationship [with China] to avoid a situation where our relationship is so bad, we veer into conflict,” said Cutler. “Upon examination of the economy, we must stabilize our relationship with China and increase our foreign investments,” she stated. “Countries want to get what they want from everyone.”
