The US Treasury Secretary Janet Yellen has made a trip to China. Prior to her, Secretary of State Antony Blinken was on a two-day visit to Beijing on June 18-19 and met President Xi Jinping. These high-level delegations are an effort by Washington to re-establish diplomatic channels of communications between US and China since bilateral relations between the two have gone downhill in recent times. In his conversation with Xi, Blinken stated that it was an obligation of both the United States and China to “responsibly manage” the relationship.^[1][2]

Recent Contentions

The US and China are in a confrontational posture more than ever in light of developments happening particularly in the last one year. Not only has President Xi Jinping further solidified his position in the 20th National Congress of the Communist Party of China (CPC), the Chinese outreach in geopolitical affairs has rapidly increased. President Xi has engaged himself in deepening ties with Russia. His proposal of a ‘12-point peace plan’ to end the Russia-Ukraine war and his high-level meeting with European leaders have raised eyebrows in Washington. However, it is the developments in the Indo-Pacific that have led to the deterioration of the relations. The Biden administration has vehemently opposed actions of the Chinese military in the South China Sea and across the Taiwan Straits. President Biden has been vocal about extending US military aid to Taiwan in case of a blockade or an invasion. Former Speaker Nancy Pelosi landed in Taipei in August 2022 as a symbolic expression of “America’s unwavering commitment to supporting Taiwan’s vibrant Democracy”.^[3] China expressed its frustration by issuing a statement citing “the United States, for its part, has been attempting to use Taiwan to contain China….These moves, like playing with fire, are extremely dangerous. Those who play with fire will perish by it.”^[4] It was followed by the PLA launching joint military exercises around Taiwan and crossing the median lines.

Since Pelosi’s visit, China has either cancelled or suspended all channels of communication. The Chinese government has been showing reluctance in engaging in defence-related discussions with the US in multilateral forums as well. It denied the request for a meeting between US Defense Secretary Lloyd Austin and its Defence Minister on the sidelines of the Shangri La Dialogue held in May-June 2023. President Xi's stern position on the reunification of China even with the use of force if necessary and his speeches where he has been directly naming Washington and its allies for “suppressing” Chinese interests in the region are a huge cause for concern.

The lack of direct communication and provocative statements from the leaders of the two countries has led to an escalation in misunderstandings and some actions that could have led to direct confrontation between the two. In February, Secretary Bliken’s visit to China had to be cancelled when a suspected Chinese “spy balloon” hovering over the US skies was blown off by the US Air Force. In East Asia, a number of incidents have been witnessed between the militaries of the two countries in the last two months. Chinese vessels have also been found monitoring some of the regional maritime exercises taking place in the South China Sea. For instance, on June 3, the naval ships of China and the US came across each other within a distance of 150 yards in the Taiwan Strait. The US Navy released the video of the incident citing that the USS Chung-Hoon, a destroyer, and the HSMC Montreal, a frigate, were conducting a "routine" transit of the strait when the Chinese ship cut in front of the US vessel. On the contrary, the Chinese spokesperson Wang Wenbin responded by stating that it was the US that first caused the “trouble and provocation”. What China did was “completely reasonable” and “legitimate”^[5]. Similar war of words has begun over the Chinese “spy-base” in Cuba.^[6] Such confrontations followed by blame-game could create extremely dangerous scenarios in the region.

Confrontation in Trade

Tensions have surmounted on the economic front as well. The US has been trying to restrict Chinese companies from acquiring advanced semiconductor technologies. Chinese apps such as TikTok have been banned. Anti-China sentiments are predominant in public and political spheres. Consequently, retaliatory actions in the form of inquiries were taken by China against American firms such as Apple Inc. and Micron. China has also imposed restrictions on some of the critical minerals that are required as consumables for the manufacturing of semiconductors. In the beginning of the Biden administration, a more rigid posture on trade or “decoupling” was advocated by the policymakers. For instance, the US Department of Commerce's Bureau of Industry and Security (BIS) has implemented new export controls on advanced computing and consumables for semiconductor manufacturing to China.^[7] The US Department of the Treasury's Office of Foreign Assets Control (OFAC) has sanctioned Chinese and their networks that are engaged in illegal, unreported, and unregulated (IUU) fishing. ^[8] Legislation such as the CHIPS and Science Act also aim to limit the dependency on China for the manufacturing of semiconductors.

Regional Dilemma

These sets of events are a significant source of worry to the US and its allies and partners in the region particularly Japan and South Korea. The ASEAN nations also seem to be in a fix given the growing contention between US-China. There is a general understanding that any escalation in the Taiwan Strait is likely to have a spill-over effect that could embroil the entire region into it. A greater commitment to security is expected from the US but at the same time, the regional stakeholders would also not want the US and China to be in a conflict-like scenario. The economic ties are too complex and interdependent, and they don’t wish to be in a situation where they have to choose between the US and China.

Shift in the US Approach

In the meantime, it has been realised that the economic ties between the two countries are too complex and intertwined to be segregated. Despite all these retributive measures from both sides, the bilateral trade shows positive growth. According to the US Bureau of Economic Analysis, in 2022, US exports of goods and services to China were $197.3 billion and imports from China were $563.6 billion, with a growth of 2.8% and 7.1% from 2021 respectively.^[9] In the past few months, some conciliatory measures have been sought by the United States. The US Treasury Secretary Janet Yellen in April 2023 stated in John Hopkins School of Advanced International Studies that “Even as our targeted actions may have economic impacts, they are motivated solely by our concerns about our security and values. Our goal is not to use these tools to gain competitive economic advantage.”^[10] The US will now restrict technology access only where it has a clear national security dimension. Similarly, National Security Advisor Jake Sullivan suggested that the US would prioritise “de-risking and diversifying, not decoupling” with China.^[11]

Key Takeaways from the Visits

The incidents of near- confrontation and change in policy perspective in the US about de-risking trade with China have been the impetus behind these visits. On the economic front, Treasury Secretary Janet Yellen had earlier expressed her wish to discuss burning issues such as sanctions and other retributive actions that have been imposed on each other that could help to “re-establish contact”. Yellen’s visit is to convey that restrictions imposed by the US are based on national security concerns but the US is willing to have fair and equal economic ties.

On the security front, China has been insisting that the US should respect its sovereignty and not support Taiwanese independence. Blinken, in his visit, reaffirmed the US' commitment to the “one China” policy.^[12] The situation in Ukraine and China's stance on Russia's invasion is not being prioritised in these visits. The US is also not emphasising much over China-Russia relations since China has refrained from military aid to the latter so far. An attempt has been made to discuss between the two sides the provocative actions of North Korea, Chinese activities in Cuba, climate change, geo-economics, food security, public health, and counter-narcotics through these visits.^[13]

Signs of Normalisation?

The US-China relations, in the present scenario, seem to be quite far from normalisation. China has been showing a greater reluctance, especially in restarting defence talks. However, there is a realisation on both sides that given the complexity and interdependence of bilateral relations and the web of ties with other stakeholders in the Indo-Pacific as well as Europe, it is important to have some guardrails. Direct military-to-military communications that were stopped in August 2022 have not been restored yet, however, such high-level visits and talks open doors for communication. President Xi is expected to visit the United States in November and before that he and President Biden would be meeting in India during the G20 summit. The rising tensions in East Asia are worrisome as it could have ramifications on bilateral, regional and global levels. A “work in progress” that initiates dialogue and averts the risk of escalation should be given a chance. Ultimately, a ‘managed’ if not ‘normalised’ relationship between US and China would be critical for all the nations in the Indo-Pacific to have an open, peaceful and stable region.

References

^[1]US Department of State, “Secretary Blinken’s Visit to the People’s Republic of China (PRC)”, June 19, 2023, URL;https://www.state.gov/secretary-blinkens-visit-to-the-peoples-republic-of-china-prc/ (Accessed on June 21, 2023)
^[2]US Department of the Treasury, “Remarks by Secretary of the Treasury Janet L. Yellen at Roundtable Discussion with U.S. Businesses Operating in the People’s Republic of China (PRC)”, July 7, 2023, URL:
https://home.treasury.gov/news/press-releases/jy1590 (Accessed on July 7, 2023)
^[3]US House of Representatives, “Pelosi, Congressional Delegation Statement on Visit to Taiwan”, August 2, 2022, URL: https://pelosi.house.gov/news/press-releases/pelosi-congressional-delegation-statement-on-visit-to-taiwan (Accessed on June 21, 2023)
^[4]Ministry of Foreign Affairs of the People’s Republic of China, “Statement by the Ministry of Foreign Affairs of the People’s Republic of China”, August 2, 2022, URL: https://www.fmprc.gov.cn/eng/zxxx_662805/202208/t20220802_10732293.html (Accessed on June 21, 2023)
^[5]Ben Blanchard and Laurie Chen ‘US Navy shows Chinese warship's 'unsafe interaction' near Taiwan’, Reuters, June 5, 2023, URL: https://www.reuters.com/world/us-navy-releases-video-chinese-warships-unsafe-interaction-near-taiwan-2023-06-05/ (Accessed on June 21, 2023)
^[6]Xiaoshan Xue, ‘Analysts: China’s Plans for Cuba May Go Beyond Spy Base’, VoA, June 29, 2023URL: https://www.voanews.com/a/analysts-china-s-plans-for-cuba-may-go-beyond-spy-base/7159210.html (Accessed on June 29, 2023)
^[7]US Department of Commerce, Bureau of Industry and Security, “Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic of China (PRC)”, October 7, 2022, URL: https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file (Accessed on June 21, 2023)
^[8]US Department of the Treasury, “Treasury Targets Serious Human Rights Abuse Aboard Distant Water Fishing Vessels Based in the People’s Republic of China”, December 9, 2022, URL:
https://home.treasury.gov/news/press-releases/jy1154 (Accessed on June 21, 2023)
^[9]US Bureau of Economic Analysis, “China - International Trade and Investment Country Facts”, URL:
https://apps.bea.gov/international/factsheet/factsheet.html#650 (Accessed on June 22, 2023)
^[10]US Department of the Treasury, “Remarks by Secretary of the Treasury Janet L. Yellen on the U.S. - China Economic Relationship at Johns Hopkins School of Advanced International Studies”, April 20, 2023, URL:
https://home.treasury.gov/news/press-releases/jy1425 (Accessed on June 21, 2023)
^[11]The White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution”, April 27, 2023 URL:
https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/04/27/remarks-by-national-security-advisor-jake-sullivan-on-renewing-american-economic-leadership-at-the-brookings-institution/ (Accessed on June 23, 2023)
^[12] Ministry of Foreign Affairs of the People’s Republic of China, “Qin Gang Holds Talks with U.S. Secretary of State Antony Blinken”, June 18, 2023 URL:
https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/202306/t20230619_11099469.html (Accessed on June 23, 2023)
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