US-China trade round up: tech and mineral sanctions, conflicting strategies and a thaw in relations?

Fri 21 Jul 2023
Posted by: Phillip Adnett
Trade News

Freight ship passing between US & Chinese flag in the ocean

The IOE&IT Daily Update rounds-up the latest developments in the China-US relationship, including a warning on sanctions and the possibility of a ‘rocky’ route back to friendly relations between the two trading superpowers.

China warns US on tech sanctions

China’s new ambassador to Washington has warned Beijing will retaliate if the Biden administration imposes new limits on technology and capital flows to China.

Beijing doesn’t want a trade or technology war, Xie Feng told the Aspen Security Forum.

However, ambassador Xie indicated it would act if the US adopts policies such as a planned screening of investment in key Chinese industries, reports Bloomberg.

China has already flexed its trade muscles by banning domestic purchasers from sourcing semiconductors from chipmaker Micron, following a US ban on TikTok on government phones and restrictions by Washington on the export of some sophisticated computer chips to China.

US will sidestep minerals sanctions

Earlier this month, Beijing said it would require Chinese companies exporting chip critical minerals gallium and germanium to obtain licenses.

The controls are an acceleration of a trade dispute over technology with the US, as the minerals are used in semiconductor manufacturing, according to MIT Technology Review.

While China dominates their production, experts believe that US defence leaders will be able to find alternative sources to mitigate the potential disruption.

Gallium is a vital component for military radars, reports BNN.

Climate talks could unfreeze relations

US climate envoy John Kerry has said cooperation with China on climate change could set their rocky relationship back on course, reports NBC.

Kerry’s trip to China this week was his third as climate envoy, and the first formal top-level climate diplomacy between the two countries since China suspended talks last August, after then-speaker of the House of Representatives, Nancy Pelosi, visited Taiwan, which Beijing claims as its territory.

During his trip, Kerry praised China’s advances in renewable energy, but called on the country to do more to do more and “enhance its climate ambition”.

The administration hopes China will agree that climate issues must be separated from politics as it is a “universal threat”, reports the Guardian.

Kerry referenced a potential meeting between president Joe Biden, and China’s leader, president Xi Jinping, on the sidelines of the Asia-Pacific Economic Cooperation meeting in November.

US split over future China engagement

A congressional select committee on China this week revealed how US lawmakers are divided on party lines on handling the US-China economic relationship, reported the South China Morning Post.

Missouri Republican congressman Blaine Luetkemeyer took aim at Thea Rozman Kendler, assistant secretary of commerce for export administration, arguing for a complete decoupling from China.

Luetkemeyer suggested that approvals for exports to Chinese companies including Huawei Technologies, along with the long-running US trade deficit with China, helped Beijing “subsidise their industries against ours and build up their military”.

Kendler claimed that the Commerce Department had taken steps to make sure that Beijing did not gain “technology that they can use to threaten US national security interests”.

Domestic intrigue

While the Biden administration is looking to rebuild relations with China, many Republicans oppose the strategy.

Presidential candidate Ron DeSantis, and rival of former president Donald Trump for the Republican party nomination, has said he would try to revoke China’s permanent normal trade relations status if he wins the White House next year.

A recent poll from Reuters/Ipsos had DeSantis trailing Trump at 47% to 19% in the race to become the Republican nominee to take on the incumbent Biden.

Biden retained a slight edge over Trump in the general election due to take place next year, according to the same polling.