Source: Blog – Alliance for American Manufacturing
“China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it,” Secretary of State Antony Blinken said during a speech outlining the Biden administration’s China strategy Thursday. | U.S. Department of State
Outlining the Biden administration’s approach on China, Secretary of State Antony Blinken said the U.S. seeks to “coexist and cooperate” with China, but “cannot rely on Beijing to change its trajectory.”
In a long-awaited speech, Secretary of State Antony Blinken outlined the Biden administration’s approach to China Thursday, stressing that the United States is not seeking to ignite conflict, but instead executing a strategy he summarized as “invest, align, compete.”
Though Russia’s invasion of Ukraine has dominated global events over the past several months, the United States “remain[s] focused on the most serious long-term challenge to the international order — and that’s posed by the People’s Republic of China,” Blinken asserted while speaking at George Washington University.
In briefly reviewing the recent history of the U.S.-China relationship, Blinken underscored the irony in China’s violation of “the laws, the agreements, the principles, the institutions that enabled its success.” Though China has reaped the rewards of World Trade Organization (WTO) membership since its entrance in 2001, it refuses to change its state-led, non-market policies, which has led to extreme overcapacity in steel as well as aluminum, solar and other U.S. industries. As research has shown, China’s non-market economy has enriched its state champions, and American workers have been left footing the bill.
Beijing’s economic manipulations have had very real consequences for American workers.
A 2020 Economic Policy Institute (EPI) report documented that the ballooning U.S. trade deficit with China between 2001 and 2018 resulted in the loss of 3.7 million jobs in the U.S. A 2022 report from EPI showed that those losses hit workers of color the hardest.
Blinken specifically cited the economic toll China’s trade cheating has exacted on the U.S. steel industry in his remarks as an example of the “lack of reciprocity” in the U.S.-China trade relationship.
Blinken said:
“Beijing directed massive over-investment by Chinese companies, which then flooded the global market with cheap steel. Unlike U.S. companies and other market-oriented firms, Chinese companies don’t need to make a profit – they just get another injection of state-owned bank credit when funds are running low. Plus, they do little to control pollution or protect the rights of their workers, which also keeps costs down. As a consequence, China now accounts for more than half of global steel production, driving U.S. companies – as well as factories in India, Mexico, Indonesia, Europe, and elsewhere – out of the market.”
China has used this same playbook a number of times in eliminating U.S. competition in other sectors. Now, it’s working to sabotage the nascent solar panel and electric car battery industries in the United States.
China’s extensive history of rule-breaking, not only within trade, but also sovereignty, territorial rights, and human rights shaded Blinken’s forecast of success of finding diplomatic solutions with Beijing.
“We stand ready to increase our direct communication with Beijing across a full range of issues. And we hope that that can happen,” he said. “But we cannot rely on Beijing to change its trajectory. So we will shape the strategic environment around Beijing to advance our vision for an open, inclusive international system.”
Thus, looking to enhance America’s position within the world rather than depend on change in China, Blinken outlined the “invest” portion of the Biden administration’s strategy as the reclamation of America’s “core sources of national strength—starting with a modern industrial strategy to sustain and expand our economic and technological influence, make our economy and supply chains more resilient, sharpen our competitive edge.”
Blinken pointed to the passage of the Bipartisan Infrastructure Law last year as one great feat in the Biden administration’s strategy to counter China’s dominance through investment in U.S. industry.
The historic $1.2 trillion package funds the modernization of America’s crumbling roadways, airports, rails, electric grid and more. Importantly, the law includes robust Buy America preferences and procurement rules that will ensure that the iron, steel and manufactured goods used in projects funded by the Bipartisan Infrastructure Law are American-made whenever possible in a transparent process overseen by the Made in America Office.
However, the Biden administration has yet to see passage of another important legislative priority — the Bipartisan Innovation Act. The bill has been moving through Congress in various forms for years. Though its contents are currently being negotiated in a conference committee comprised of House and Senate members, the bill is intended to bolster America’s competitiveness against rivals like China by investing billions in domestic manufacturing, with specific attention to the critical sectors like semiconductors.
Memorably, Biden called upon Congress to “pass the damn bill and send it to me” earlier this month. Blinken echoed this imperative in his speech, framing it as part of an opportunity to ensure that the world’s technology is “rooted in democratic values, not authoritarian ones.”
“We can get this done, and it can’t wait – supply chains are moving now, and if we don’t draw them here, they’ll be established somewhere else,” Blinken said. “As President Biden has said, the Chinese Communist Party is lobbying against this legislation – because there’s no better way to enhance our global standing and influence than to deliver on our domestic renewal. These investments will not only make America stronger; they’ll make us a stronger partner and ally as well.”
Blinken also framed the Biden administration’s “compete” strategy, warning China that the U.S. will “push back on market-distorting policies and practices, like subsidies and market access barriers, which China’s government has used for year to gain competitive advantage.” However, he did not provide any further insight into the Biden administration’s divided stance on the tariffs that were imposed on Chinese imports under the Trump administration as part of its trade negotiations with the nation other than to say that the Biden administration will “fight for American workers and industry with every tool we have…”
As U.S. Trade Representative Katherine Tai, Agriculture Secretary Tom Vilsack, and National Security Adviser Jake Sullivan have argued, dropping the tariffs now would relinquish a valuable piece of leverage in an increasingly tumultuous relationship. Hence, trade tools such as tariffs should remain a valuable part of the Biden administration’s approach.
In discussing the U.S.-China trade relationship, Blinken also alluded to the Uyghur Forced Labor Prevention Act, which goes into effect this June, as part of America’s stand against China’s “economic coercion and intimidation.”
As evidence of the Biden administration’s “align” strategy in meeting the challenges set forth by China, Blinken pointed to the newly launched Indo-Pacific Economic Framework for Prosperity (IPEF), Biden’s summit with the Quad countries (Australia, Japan and India), and the U.S.-ASEAN summit earlier this month, along with the administration’s closer relationship with the European Union.
Blinken closed his speech by reiterating the Biden administration’s mission to work with China on mutual goals like reducing carbon emissions. And yet, the secretary also acknowledged Beijing’s aims to “pursu[e] asymmetric decoupling, seeking to make China less dependent on the world and the world more dependent on China.”
If China achieves its aims of hollowing out the United States’ industrial capacity, America will be put in a position of considerable exposure.
“For our part, we want trade and investment as long as they’re fair and don’t jeopardize our national security,” Blinken said. “China has formidable economic resources, including a highly capable workforce. We’re confident that our workers, our companies will compete successfully – and we welcome that competition – on a level playing field.”
Key to creating that level playing field are the trade tools that the U.S. already has in its arsenal in the form of the Section 301 tariffs on Chinese imports and those proposed in the Leveling the Playing Field Act 2.0 within the Bipartisan Innovation Act.
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