U.S.-China Policy Update, May 30, 2023
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U.S.-China Policy Update, May 30, 2023

Brownstein Newsletter, May 30, 2023


What to Watch: May 20 - June 2

China Rejects U.S. Request for Defense Chief Meeting. The Chinese government has declined a U.S. request for a meeting between the defense chiefs for the two nations, according to an announcement from the Pentagon. The meeting between Defense Secretary Lloyd Austin and China’s new defense minister, Li Shangfu, would have been on the sidelines of an annual security forum in Singapore scheduled to begin this coming Friday. This was the latest attempt by officials in Washington to restart high-level communications with the Chinese government, which have been especially fraught with Russia’s war in Ukraine and ongoing tensions over Taiwan. Chinese officials called the offer insincere and accused the United States of suppressing Chinese leaders, suggesting that the request was declined in part due to ongoing sanctions that the Trump administration imposed on Li for his role in acquiring Russian weapons for China’s military.
New Reports of Chinese Aircraft Carrier in Taiwan Strait. Taiwan’s defense ministry said the Chinese military’s Shandong aircraft carrier and two other Chinese ships sailed through the Taiwan Strait this past weekend. China has continued to conduct military activities of various sizes around Taiwan as the Chinese government could be preparing for an invasion of the territory in the coming years. Saturday’s incident is just the latest in a series of activities involving Chinese ships and aircraft navigating through the strait, activities which have seen an uptick ever since China’s war game exercises around the island in August 2022.
U.S. Sanctions China and Mexico for Fentanyl. On Tuesday, the Treasury Department announced sanctions for 17 individuals and entities based in China and Mexico for producing illicit fentanyl and other synthetic drugs. The sanctions target seven entities and six individuals in China, including: Youli Technology Development Co., Yason General Machinery Co., and Shenzen Yason General Machinery Co. The sanctioned individuals and entities are suspected of being involved in the sale of pill press machines, die molds and other equipment used to impress counterfeit trade markings onto illicit drugs laced with fentanyl. Drug overdose deaths involving fentanyl have more than tripled since 2016. U.S. officials have sought assistance from their Chinese counterparts to limit the flow of precursor fentanyl chemicals from China to the United States to reverse this trend, but cooperation has been limited.
Debt Ceiling Agreement Caps Defense Spending at Biden’s Budget Levels. An agreement negotiated between House Republicans and the White House to lift the nation’s debt ceiling includes several provisions meant to reduce the federal deficit. Among those provisions is a cap on defense topline spending to match President Biden’s $886 billion request for FY 2024, an increase of 3.3% over current spending levels. Defense hawks reacted critically to news of the cap, arguing that the increase is not enough to match the pace of inflation. If the bill is enacted as drafted, the defense topline number will move from $886 billion in FY 24 to $895 billion in FY 2025. Future spending may also be restrained, but those provisions are not mandatory and could be waived by a future Congress.
China’s First Domestically Made Commercial Plane Enters Into Service. China’s first domestically manufactured passenger jet successfully completed its first commercial flight on Sunday, marking a new milestone as China aims to compete with Western manufacturers who have dominated commercial aerospace for decades. The C919 plane was built by the Commercial Aviation Corporation of China (COMAC). It is a narrow-body aircraft meant to rival the two most commonly used aircraft in the world, the Airbus A320 and the Boeing 737. While COMAC designed most of the plane’s major elements, the state-owned company still relied on third parties to develop the engines for the craft. The company says it has over 1,200 orders for the new jet, and it plans to build 150 of the planes each year for the next five years.




Highlight Reel: May 12 - May 29

White House
China Announces Restriction on Use of Micron Products. On May 20, the Chinese government announced it would ban the use of Micron Technology products in certain types of critical infrastructure, citing “potential network security issues.” The restriction prevents Micron products from being used in “Critical Information Infrastructure,” a term that includes government entities and businesses operating in industries where data breaches would result in a national security risk. The decision placed pressure on the Biden administration to respond to the Chinese action, which may include preventing U.S. and foreign companies from backfilling Micron orders in China. Secretary of Commerce Gina Raimondo is actively engaging with U.S. and foreign companies, as well as her counterparts in Europe and Asia, on this issue, seeking intelligence on potential future Chinese actions and also discussing with companies various options.
Department of Commerce
Raimondo Meets with Chinese Commerce Minister in D.C. On May 25, Commerce Secretary Gina Raimondo met with Chinese Commerce Minister Wang Wentao in Raimondo’s Washington, D.C., office. The pair had a “candid and substantive” discussion, according to Raimondo’s staff, focused on trade, investment and export policies. Wang’s meeting marked the first U.S.-China cabinet-level exchange in several months as the two nations continue to work toward restarting discussions after a series of diplomatic flaps. Raimondo reportedly scolded the Chinese government for taking actions against U.S. companies operating in China while Wang questioned U.S. policies toward China on issues such as semiconductors, export controls and foreign investment reviews. Both sides agreed to open communication channels to help manage the relationship between the world’s two largest economies.
Office of the U.S. Trade Representative
U.S. and Chinese Trade Ministers Meet in Detroit. On May 26, U.S. Trade Representative Katherine Tai and Chinese Commerce Minister Wang Wentao met on the margins of the Asian Pacific Economic Cooperation (APEC) conference in Detroit, just one day after Wang met with U.S. Commerce Secretary Gina Raimondo. Similar to Raimondo, Tai raised concerns about China’s actions against U.S. companies operating in China, while Wang raised concerns about U.S. tariffs on Chinese goods, issues related to Taiwan and the U.S.-led Indo-Pacific Economic Framework (IPEF). According to a statement from China’s Commerce Ministry, the discussion was “candid, pragmatic and in-depth” and included exchanges on “economic and trade relations and regional and multilateral issues of common concern while agreeing to continue to communicate.”
U.S., Taiwan Agree on Framework for Trade Agreement. On May 18, the United States and Taiwan announced an early harvest agreement had been reached under the U.S.-Taiwan Initiative on 21st Century Trade, a key step in forming a bilateral trade agreement. The two countries agreed to strengthen bilateral cooperation on trade facilitation, regulatory practices and anticorruption, among other areas. The agreement also outlined a series of actions for Taiwan to take to remove regulatory burdens for engaging in international trade, including allowing customs forms to be filed electronically and taking steps to enhance the transparency of its commercial regulations, among other actions. Wang Wenbin, China’s Foreign Ministry spokesperson, noted that “China strongly opposes official interaction of any form between China’s Taiwan region and countries that have diplomatic relations with China” in press remarks issued following the agreement announcement. Wenbin added, “that includes negotiating or signing any agreement that implies sovereignty and has an official nature.”
Department of State
U.S. Signs Defense, Diplomatic Agreements with Pacific Island Nations. The Biden administration signed or renewed several key agreements with Pacific Islands states over the past week, expanding the United States’ ties with a key geopolitical region in competition with China. Secretary of State Antony Blinken signed a security cooperation agreement with Papua New Guinea (PNG) Prime Minister James Marape on May 22, under which the U.S. government will provide training and funding to PNG’s military. The U.S. military is also expected to gain conditional access to certain ports and military bases in PNG. Secretary Blinken also oversaw the signing of the extension of the Compact of Free Association (COFA) through 2043 with Palau on May 22, under which Palau receives certain U.S. economic subsidies and access to domestic programs and the United States maintains access to certain locations in the country for military operations. Alissa Bibb, Charge d’Affaires of the U.S. Embassy in the Federated States of Micronesia (FSM), also finalized the extension of the COFA with the FSM on May 23.




On the Calendar: May 30 - June 5

Senate Banking, Housing, and Urban Affairs Committee Hearing
Countering China: Advancing U.S. National Security, Economic Security, and Foreign Policy
May 31, 10:00 a.m.
Private Sector
The Hudson Institute
Partnership of Freedom: AUKUS Viewed by Its Architects
May 31, 12:00 p.m.
The Atlantic Council
Beyond Chatbots: How the U.S.-China Tech Race will Define AI’S Future
June 5, 11:30 a.m.



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