U.S. - China Policy Update, March 28, 2023
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U.S. - China Policy Update, March 28, 2023

Brownstein Newsletter, March 28, 2023


What to Watch: March 27 - 31

House and Senate to Push Ahead on TikTok Legislation. Coming off of a high-profile hearing in the House Energy and Commerce Committee last week in which both Democrats and Republicans sharply questioned TikTok’s CEO Shou Chew, House Speaker Kevin McCarthy (D-CA) tweeted, “The House will be moving forward with legislation to protect America from the technological tentacles of the Chinese Communist Party.” Several TikTok-related bills have been introduced since the start of this Congress, with each proposal addressing different aspects of the concerns around the app. The legislation with the most support appears to be the RESTRICT Act, introduced by Sens. Mark Warner (D-VA) and John Thune (R-SD) and endorsed by President Biden, which would empower the Department of Commerce to ban any foreign communications technology that poses a risk to national security. The Warner-Thune bill will likely be marked up in the Senate Commerce Committee in the coming weeks.
Taiwan’s President Tsai Visiting U.S. and Central America This Week. Taiwan’s President Tsai Ing-wen is expected to visit California, New York, Guatemala and Belize in a whirlwind trip later this week. Little is known about Tsai’s itinerary, but many expect Tsai to meet with House Speaker Kevin McCarthy at some point during her travels, a meeting that will likely be heavily criticized by China’s Communist Party. Speaker McCarthy has privately expressed an interest in visiting Taiwan himself, just as former House Speaker Nancy Pelosi visited the island last year. However, Biden administration officials have cautioned against such high-profile visits over fears of further inflaming the CCP’s aggression toward Taiwan. Tsai’s visit also comes as Taiwan appears to be losing its grip on international relations with more nations. On Sunday, Honduras was the latest country to cut diplomatic ties with Taiwan in favor of China. Now, only 13 nations officially recognize Taiwan on a diplomatic level.
China’s Economic Future Murky as Global Financial Stability Faces Risks. With recent banking crises in the United States and Europe, coupled with stubbornly high inflation rates, the International Monetary Fund (IMF) has predicted that the world economy will see growth slow down to just below 3% this year, nearly a full point below the historic average of 3.8%. The global slowdown is unwelcome news for China, which has faced its own economic slump as it dealt with COVID-19 outbreaks and fallout from the government’s abandoned “zero-COVID” strategy. In a speech at the China Development Forum over the weekend, Han Wenxiu, a CCP official in charge of financial and economic affairs, cautioned, “The foundation of China’s economic recovery is not yet solid enough,” and he warned about the prospect of global stagflation. At the same forum, Vincent Clerc, CEO of one of the world’s largest shipping companies and a major player in the Chinese economy, stated that China’s economic rebound has not met expectations and he suggested that the nation remains “stunned” from COVID-19-related disruptions.



Highlight Reel: March 16 - 25

House of Representatives
House Energy and Commerce Committee Hearing Shows Bipartisan Unity on the Dangers of TikTok. On March 23, the House Energy and Commerce Committee held a hearing entitled “TikTok: How Congress Can Safeguard American Data Privacy and Protect Children From Online Harms.” The committee heard testimony from Shou Chew, CEO of TikTok, with questions from Democratic and Republican Committee members primarily focusing on the ability of the People’s Republic of China’s (PRC) government to obtain U.S. citizens’ personal data using TikTok’s platform, as well as the app’s influence on U.S. youth. Chew faced a range of questions related to TikTok’s proposed “Project Texas,” which would aim to insulate all U.S. user data by the end of 2023 in a U.S.-controlled-and-based facility. A number of bipartisan committee members expressed skepticism that the app could realistically cut off data collected on the platform from its owner, ByteDance, and by extension the PRC government. The committee showcased bipartisan consensus on the dangers posed by the app’s ties to the PRC, with multiple committee members announcing support for a ban of the app during the hearing. However, some Democratic members voiced concern over an immediate ban of the app, with Rep. Lori Trahan (D-MA) noting that Congress should be wary of “tribalism or nationalism when it comes to tech policy.” The committee’s ranking member, Rep. Frank Pallone (D-NJ), also warned against implementing a ban before Congress had access to a full range of relevant information, voicing support for broader data privacy legislation that would impact a wider range of tech companies. While the hearing provided a spate of negative publicity for TikTok and united many members of the committee around taking action to limit TikTok’s reach in the United States, it was unclear what form legislation impacting the app would take. That a fraction of influential Democrats are cautious of pursuing a full ban of the app make enacting legislation impacting TikTok in the Senate less feasible than in the House, as a majority of Republicans will likely continue to support a full ban of the app. Additionally, the Biden administration has signaled its support for a sale of the app to a non-Chinese entity, with Secretary of Commerce Gina Raimondo noting a ban would have devastating impacts on the Democratic Party’s voter base under the age of 35. On March 23, China’s Ministry of Commerce said the country would “firmly oppose” a sale of the app, making it unclear whether a sale could be completed by ByteDance.
China Select Committee Holds Hearing on Uyghur Genocide. On March 23, the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party held its second hearing, which focused predominately on the PRC government’s human rights violations against Uyghurs and other ethnic minorities in China’s Xinjiang region. The treatment of Uyghurs in Xinjiang has been an enormous source of criticism of China by human rights groups and governments around the world, as the PRC government has been accused of putting certain ethnic groups through forced labor, mass surveillance, and having placed in excess of 1 million Uyghurs in internment camps. The committee heard testimony from Gulbahar Haitiwaji, a former prisoner of the camps, Qelbinur Sidik, who was stationed as a teacher in an internment camp, and other experts on the conditions faced by Uyghurs and other minorities in Xinjiang. Committee Chair Mike Gallagher (R-WI) said the conditions in Xinjiang should “serve as a warning for what the world would look like under CCP leadership” in response to the witnesses’ testimony, which included reports of abuse and forced education in the camps, as well as an expansion of high-security prisons and forced labor facilities by the Chinese government over recent years.
House Ways and Means and Senate Finance Committees USTR Hearings Focus on China. In a pair of back-to-back hearings last week, U.S. Trade Representative Katherine Tai discussed President Biden’s 2023 Trade Policy Agenda with the House Ways and Means and the Senate Finance committees. Released on March 1, President Biden’s trade agenda focuses on building ties through multilateral trade agreements, such as the Indo Pacific Economic Forum (IPEF), the Americas Partnership for Economic Prosperity (APEP) and pacts with Kenya and Taiwan. Republicans and Democrats in both hearings repeatedly raised issues related to China, including China’s aggression toward Taiwan, supply chain vulnerabilities, Phase One/301 tariffs, steel, China’s influence in Latin America, and the CCP’s treatment of Uyghurs in the Xinjiang region of China. Ambassador Tai also expressed an interest in testifying before the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party in order to discuss trade practices between the two nations.
Department of Commerce
CHIPS Funding Guardrails Limit Investments in China, Countries of Concern. On March 21, the Department of Commerce released a proposed rule to prevent recipients of the $52 billion in subsidy funding included in the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022 from making investments in semiconductor manufacturing in foreign countries of concern—including China, Russia, Iran and North Korea. Under the proposed rule, any “significant transaction involving the material expansion of semiconductor manufacturing capacity” in a foreign country of concern would be prohibited for 10 years following an entity’s receiving of CHIPS incentives funding, providing that the transaction does not apply to legacy semiconductors in the respective foreign market or that certain other exemptions are absent. The proposed rule would also prevent recipients of CHIPS incentives from engaging in joint research or technology licensing efforts with a foreign country of concern. The Commerce Department is expected to begin accepting incentive funding applications for semiconductor manufacturing projects in late June of 2023.
Department of Commerce Adds 14 Chinese Entities to Unverified List. On March 24, the Bureau of Industry and Security (BIS) issued a final rule adding 32 entities and individuals to the Unverified List (UVL), including 14 Chinese entities. The UVL includes entities involved in transfers of goods with end-uses or users in transactions subject to the Export Administration Regulations (EARs) that cannot be verified by BIS officials. Additionally, BIS prevents exporters from seeking license exemptions for exports of items subject to the EARs to listed entities. The Chinese entities added to the UVL include Airpart Consolidated Trading; ECOM International (HK) Co., Ltd.; Guangzhou Trusme Electronics Technology Co.; HK P&W Industry Co. Ltd. (HKPW); Jet-Prop International Forwarding (HK) Ltd.; and Sunway Technology Electronics Ltd.
Department of Commerce, USTR Participate in Second Indo-Pacific Economic Framework Negotiating Round. From March 13–19, a U.S. interagency delegation attended the second negotiating round for the Indo-Pacific Economic Framework for Prosperity (IPEF) in Bali, Indonesia, along with representatives from the other IPEF member countries—Australia, Fiji, India, Brunei Darussalam, Indonesia, Japan, Korea, New Zealand, the Philippines, Malaysia, Vietnam, Thailand and Singapore. The U.S. delegation was co-led by Sharon Yuan, counselor, U.S. Department of Commerce, and Sarah Ellerman, assistant U.S. trade representative for Southeast Asia and the Pacific. Discussions under the second round primarily focused on draft negotiating text for Pillar I (Trade) of the agreement under the topics of labor, environment, digital trade and technical assistance. Additionally, officials from New Zealand and Australia jointly shared a text proposal on inclusivity. The IPEF, which is ostensibly geared toward improving the economic and commercial ties among Indo-Pacific states, as well as bolstering U.S. regional economic influence in relation to China, held its initial round of negotiations from Dec. 10–15, 2022. Details on the upcoming third negotiating round have yet to be released.
President Xi Visits Moscow for Discussions on Ukraine, International Cooperation. On March 20, PRC President Xi Jinping traveled to Russia for a three-day visit that was meant to show support for Russia’s government and explore potential options for a peace agreement in Ukraine. In a joint statement issued following the visit, President Putin committed to “the resumption of peace talks [in Ukraine] as soon as possible.” The statement also noted that Russia “welcomes China’s willingness to play a positive role for the political and diplomatic settlement of the Ukraine crisis,” adding that both countries opposed “bloc confrontation … [or] fanning the flames,” ostensibly referring to U.S. and partnered involvement in the Ukrainian military’s defense against Russia’s invasion. The statement also called for the promotion of a “multipolar world,” with Xi adding in his remarks as he departed Moscow that “Together, we should push forward these changes that have not happened for 100 years”—statements alluding to the leaders’ unspoken ambition of decreasing U.S. influence in international affairs relative to Russia’s and China’s. President Xi had announced plans to conduct a phone call with Ukrainian President Volodymyr Zelenskyy following the visit, though such a call was not confirmed to have taken place by the Ukrainian government. In a statement given on March 20, Secretary of State Antony Blinken noted that instead of “condemning” Russia’s invasion, China “would rather provide diplomatic cover for Russia to continue to commit those very crimes.” Secretary Blinken’s remarks followed the State Department publishing its 2022 Country Reports on Human Rights Practices on March 20, which found “credible reports” of a number of war crimes committed by Russian forces in Ukraine.



On the Calendar: March 27 - 31

Private Sector
Middle East Institute
Saudi-Iranian Rapprochement: A Diplomatic Coup or a Temporary Respite?
March 27, 10:00 a.m.,
Event Page
Jewish Institute for National Security of America
Dig Deal? China Brokers Iran-Saudi Normalization
March 27, 2:00 p.m.,
Event Page
The Center for a New American Security
India-China Border Tensions and U.S. Strategy in the Indo-Pacific
March 30, 9:30 a.m.,
Event Page



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