WITH Beijing already becoming a top target in the US election campaign, President Xi Jinping’s government is resisting any move that could backfire on the world’s second-largest economy.
China’s restraint was on display last week after President Joe Biden blasted Beijing as “xenophobic” and vowed to triple tariffs on Chinese steel and aluminium exports, during a campaign stop in a swing state where rust-belt jobs are on the line.
On the same day, Washington opened a probe into its rival’s shipbuilding sector, causing stocks of Chinese firms in that industry to tumble. Congress also fast-tracked efforts to force TikTok to divest from its Chinese parent ByteDance, by bundling the decision into an aid bill that passed on Saturday (Apr 20).
China’s response to all this has been relatively muted. In a largely symbolic measure, Beijing imposed tit-for-tat tariffs on propionic acid, an export market worth US$7 million to America last year, according to customs data. Officials brushed off the shipping probe as being about “domestic politics”, and deflected criticism of their immigration policies, asking if Biden was really talking about the US.
After a meeting between Xi and Biden in November “the Chinese understood that US-China relations would not be perfect, but was an improvement relative to last year”, said Zhu Junwei, a former researcher in the People’s Liberation Army who is now director of American research at Grandview Institution, a Beijing think tank. “China is learning to be more practical, more pragmatic – to compartmentalize different areas.”
Chinese policymakers already battling a protracted property crisis and weak demand at home have scant incentive to escalate tensions. Beijing is relying on the buoyant American consumer as it leans on exports to hit its annual growth goal of about 5 per cent.
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Another reason for moderation: The latest US measures have minimal immediate impact. China sells little of the targeted metals to the US, and the shipbuilding probe will take time. The Senate still needs to approve the TikTok bill, and the company could file an injunction if Biden signs the proposal.
Senior White House officials are seeking to keep communication lines open to maintain guardrails on the relationship. US Secretary of State Antony Blinken will arrive in China this week, where he will spell out how Chinese companies’ support for Russia’s war machine is impacting European security, according to a senior US official.
His trip comes on the heels of Treasury Chief Janet Yellen’s visit to Beijing earlier this month, and the first phone call between China’s new defence minister and his US counterpart.
While Beijing might be able to dismiss largely symbolic tariffs, the prospect of TikTok being acquired by an American entity does appear to be worrying China. Behind the scenes, Chinese embassy workers are quietly meeting congressional staff to lobby against the bill, Politico reported on Wednesday.
The Chinese government has signalled it will not allow a forced sale of the app with 170 million American users, which US national security officials say China could use to manipulate the election. The popular video-sharing platform says it’s committed to “protecting the integrity” of such votes.
Another option is that Beijing uses domestic measures it had passed to control technology exports and foreign acquisitions to curtail any sale by stripping out TikTok’s algorithms, according to the Carnegie Endowment for International Peace.
“Reciprocity is a key feature of Chinese trade and foreign policy making,” said Josef Gregory Mahoney, a professor of international relations at Shanghai’s East China Normal University, adding that Beijing is also aware of the hawkish nature of the US election cycle.
Biden’s challenger Donald Trump has pledged to impose 60 per cent tariffs on imports from China if he clinches a second term. A trade war resurfacing in 2025 is “one of the biggest risks” to China, according to Larry Hu, chief China economist at Macquarie Group. “But that’s unlikely to happen this year.”
Still, not all the tension is down to election posturing. Over the past four years, Biden has blacklisted more Chinese entities than any other American president, as he pushed US allies to join his campaign to kneecap Beijing’s access to high-tech chips over national security concerns.
The Biden administration argues its curbs on cutting-edge semiconductors fall under a “small yard, high fence” strategy, but national security concerns risk hobbling trade in other areas. While the petition from union workers against Chinese shipbuilders mainly focuses on claims of unfair subsidies, it also has a national security element woven into the request.
“I do not think there is a policy that would be viewed as ‘too harsh’ on China from Washington’s perspective,” said Deborah Elms, head of trade policy at the Hinrich Foundation. “China certainly wants to limit damage this year.”
Exemplifying how the industry is rallying to take advantage of the hawkish election season, the largest US airlines asked Biden to halt approvals of new flights to America by Chinese operators earlier this month, citing Beijing’s “anti-competitive policies”.
Xi’s backing of President Vladimir Putin allows his nation’s planes to take shorter routes over Russia, whereas American carriers are excluded from doing so by unilateral sanctions the US imposed on Moscow over its invasion of Ukraine.
It is unclear how Biden will respond to that request. But what is plain is the US-China relationship is now in a more precarious position, according to Sun Yun, director of the China Program at the Washington-based Stimson Center.
“Even when Washington aims to stabilise ties, competition is still the overarching theme,” she said. “Given the election year, things will not be easy.” BLOOMBERG
