Analysis of Recent Biden Administration Remarks on U.S.-China Policy
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Analysis of Recent Biden Administration Remarks on U.S.-China Policy

Brownstein Client Alert, April 28, 2023

While the Biden administration has refrained from releasing a formal China strategy, recent speeches on U.S.-China relations by Treasury Secretary Janet Yellen and National Security Advisor Jake Sullivan have provided key insights as to how the White House is tailoring its economic agenda toward the communist nation.

Both Yellen’s and Sullivan’s remarks indicate that the administration does not seek to de-couple U.S.-China trade ties, nor does it desire economic competition to escalate into a greater conflict of any kind. However, the United States will not hesitate to continue using its toolbox, particularly export controls, against China in order to protect its national security interests. The two officials also convey that the U.S. approach toward China will include extensive, collaborative efforts with key allies. Relatedly, it is likely that the dovish messaging by Yellen and Sullivan may be intended to reassure these partners who hold similar concerns over China’s malign national security actions but are wary of a radical shift in the West’s economic relationship with the communist nation.

As the China challenge continues to remain a key focus of lawmakers, the White House, the private sector and stakeholders should pay close attention to this growing effort by the administration to publicly outline its plans to address China on both the domestic and international fronts. The White House is expected to continue this initiative over the coming weeks, evidenced by an upcoming public event featuring U.S. Ambassador to China Nicholas Burns and the expected release of an executive order next month that will significantly boost oversight and transparency regarding outbound American investments toward China.

 

Key Themes of Both Speeches

In her speech, Treasury Secretary Yellen maintained a confident message about U.S. economic stature and delivered measured but decisive warnings to the People’s Republic of China (PRC). She emphasized that the U.S.-China relationship is one of competition, not conflict, as she laid out three central principles of the U.S. approach to China: securing the national security interests of the United States and its allies and partners; ensuring a healthy economic relationship centered on a rules-based international approach; and cooperating on pressing issues, including foreign debt and climate change.

National Security Advisor Sullivan’s speech centered on a range of issues pertaining to the Biden administration’s economic agenda and industrial strategy, particularly homing in on how the long-held neoliberal free trade consensus has become outdated and that a new approach requires reimagined trade deals and significant public investments by Western governments as a means to lessen their reliance on an increasingly malign-acting China.

 

Key Takeaways and Implications

Perhaps the most striking commonality between the speeches by Yellen and Sullivan is that both took dovish stances on U.S.-China economic competition. Yellen repeatedly emphasized that the U.S.-China relationship is, and should remain, one of competition, not conflict, while Sullivan said the administration’s position is not a complete global decoupling from China. At the same time, both officials noted China has violated the international rules-based economic order and they pledged to hold the communist nation accountable. To do so, Yellen and Sullivan both stressed continued collaboration with allies and partners on addressing multiple issue areas facing China, including security and human rights (Yellen) and economics and trade (Sullivan).

Both officials also issued sentiments indicating that the Biden administration has concluded that U.S. economic policies of the past that promoted globalization and entailed lower tariffs and less government influence in the market failed to deliver on promises of inclusive economic growth. According to Sullivan, “The postulation that deep trade liberalization would help America export goods, not jobs and capacity, was a promise made but not kept.” For her part, Yellen exemplified China, stating that the country’s economic liberalization between 1980–2010 stimulated significant growth, but the communist nation has since turned toward “economic nationalism.” These remarks, along with Yellen’s hope for China to abide by the rule-based international order, may mean the Biden administration envisions that, by taking steps to diminish the West’s reliance on China, the communist nation may therefore change its behavior in a manner sought by the Western bloc.

In her speech, Yellen went as far as to indicate that the United States would prioritize national security concerns in its relationship with China, even if doing so comes at an economic cost. However, the length to which Yellen sought to assure that the U.S. does “not seek to decouple our economy from China’s,” is likely a message to American allies who hold similar concerns over China’s malign national security actions but are wary of a radical shift in the West’s economic relationship with the communist nation. Similarly, Sullivan stressed that the Biden administration is seeking to “manage competition responsibly” and would cooperate with China on shared interests, such as food security and climate change. Yellen issued a parallel sentiment in her speech, labeling U.S.-China cooperation on shared interests—including climate—as one of the key guiding principles of the U.S. approach to China. Emily Benson, a trade expert at the Center for Strategic and International Studies (CSIS), tweeted that this messaging (particularly by Sullivan) “was replete with support for the EU position” and “reflects a clear intention to reaffirm the transatlantic relationship.”

Both officials specifically raised export controls as a tool the administration could use to protect certain technologies from the Chinese military. Yellen said the United States may deploy such measures as a means to safeguard “vital national interest[s],” while Sullivan couched that instances for using those restrictions would “remain narrowly focused on technology that could tilt the military balance” in order to ensure that “U.S. and allied technology is not used against us.” Sullivan also justified prior instances of the United States adding Chinese companies to the Commerce Department’s Entity List as a “straightforward” decision motivated by national security concerns.

By having Yellen and Sullivan issue their speeches within days of each other—and with U.S. Ambassador to China Nicholas Burns scheduled to participate in a Stimson Center event next week on U.S.-China relations—the Biden administration is clearly making a full-court effort to clarify its position on China. Some observers posit that, given the continued negative trajectory of U.S.-China relations as well as an anti-China approach not dissimilar to that of the Trump administration, the speeches are an effort “to cast the administration’s position in a much more positive or constructive viewpoint,” according to Yukon Huang, a senior fellow at the Carnegie Endowment for International Peace. However, others remain uncertain as to the greater motivation behind the recent speeches. To this point, Scott Kennedy, an expert on Chinese business and economics at CSIS, stated it was difficult to assess whether Yellen’s remarks represented “a shift in an overall administration policy, a difference of opinion within the administration,” or an effort to project the administration’s initial plans in a more appealing tone.

Brownstein is closely monitoring the concrete actions the United States may take toward China in the coming weeks and months, including the expected White House executive order next month that will significantly boost oversight and transparency regarding outbound American investments toward China. The White House has begun briefing industry groups on the general contours of the executive order, which is expected to include requirements for U.S. companies to give notice on new investments in China and also ban some deals in certain sectors, such as microchips. For more information on how recent developments in U.S.-China policy can affect your industry, please contact the authors of this alert.


THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING RECENT SPEECHES BY WHITE HOUSE OFFICALS RELATING TO U.S.-CHINA POLICY. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.

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