The outlook for U.S.-China trade relations is likely to remain challenged after this week’s high-level diplomatic talks showed that President Joe Biden’s team does not plan to wholly abandon the Trump administration’s tough tone in discussions with Beijing.
Though Washington and Beijing struck a ceasefire in their tit-for-tat trade feud with last year’s “phase one” agreement, representatives on both sides are far from pleased with the status quo and see the other as a key economic rival.
That competition was on full display on Thursday, when the countries began two days of meetings in Anchorage, Alaska.
Secretary of State Antony Blinken began his remarks by noting that the U.S. would highlight “its deep concerns with actions by China, including in Xinjiang, Hong Kong, Taiwan, cyber attacks on the United States [and] economic coercion toward our allies.”
Yang Jiechi, director of the Central Foreign Affairs Commission of the Chinese Communist Party, said the U.S. “does not have the qualification to say that it wants to speak to China from a position of strength.”
Though the talks were seen more as a diplomatic exercise than an economic one, the prickly exchange is likely an early snapshot of the bitter battles ahead for the Biden trade team. And at stake is one of the most valuable trading relationships in the world.
China is currently the United States’ third-largest goods trading partner with $558.1 billion in total (two-way) trade in 2019, according to the Office of the USTR. That massive trading volume supported an estimated 911,000 U.S. jobs as of 2015, with 601,000 stemming from goods exports and 309,000 from services exports.
China is also the third-largest export market for American farmers and annual trade in agricultural commodities totaled $14 billion two years ago. China is the United States’ largest supplier of goods imports.
Chart of China’s purchases of U.S. manufactured goods, agriculture and energy from January to November 2020 compared with targets set under the “phase one” trade deal
Clete Willems, a former World Trade Organization litigator at the Office of the USTR, told CNBC on Friday that he wasn’t surprised at the lack of progress in Anchorage.
Willems, who was once a member of Trump’s trade team and is now a current partner at law firm Akin Gump, said that the Anchorage meetings were more a chance to officially air complaints and less a realistic attempt at economic remedy.
“I had low expectations for Alaska and those expectations have been met,” Willems, tongue in cheek, said of the talks.
“I think [the Chinese government] misread the situation with the Biden team, and they thought these guys would come in and roll back all the Trump measures,” he added. “I think they’re finding out that that isn’t going to be the case. But I think they need to hear it directly from Blinken.”
U.S. delegation comments on talks with Chinese counterparts
The trade negotiations with China carry commercial importance, but also represent an opportunity to protect U.S. national security interests and shore up access to critical technologies.
Weeks before the meetings in Anchorage, Alaska, the Biden administration drafted an executive order directing government departments to review key supply chains, including those for semiconductors, high-capacity batteries, medical supplies and rare earth metals.
“The Biden Administration has signaled that trade at all cost is not their position and that they will not curtail their views and pushback on human rights or national security (for example) in order to have a ‘good’ trade relationship,” Dewardric McNeal, an Obama-era policy analyst at the Defense Department, said in an email on Friday.
Though Biden’s order did not mention China by name, it directed agencies to review gaps in domestic manufacturing and supply chains that are dominated by or run through “nations that are or are likely to become unfriendly or unstable.”
The directive was widely viewed to include China, one of the globe’s largest exporters of rare earths metals, a group of materials used in the production of computer screens, state-of-the-art weapons and electric vehicles.
