Joe Biden’s China policy? A balancing act for a toxic relationship

In addition to a deadly pandemic and a weakened economy, President-elect Joe Biden will inherit one more challenge when he takes office in January: a toxic relationship with the world’s second-largest economy.

President Donald Trump has placed tariffs on hundreds of billions of dollars of products from China, imposed sanctions on Chinese companies and restricted Chinese businesses from buying US technology — a multiyear onslaught aimed at forcing Beijing to change its trade practices and as punishment for its authoritarian ways. He shows no sign of letting up in his final days in office: On Thursday, Trump issued an executive order barring investments in Chinese firms with military ties.

The hard choices for Biden will include deciding whether to maintain about $360 billion worth of tariffs on Chinese imports that have raised costs for US businesses and consumers, or whether to relax those levies in exchange for concessions on economic issues, or other fronts, like climate change.

Biden will need to walk a careful line. He and his advisers view many of Trump’s measures, which were aimed at severing ties between the Chinese and US economies, as clumsy, costly and unstrategic. They say they want to take a smarter approach that combines working with the Chinese on some issues like global warming and the pandemic, while competing with them on technological leadership and confronting them on other issues like military expansionism, human rights violations or unfair trade.

But even if it departs from Trump’s punishing approach, the Biden administration will be eager to maintain leverage over China to accomplish its own policy goals. And the new administration will face pressure from lawmakers in both parties who view China as a national security threat and have introduced legislation aimed at penalizing Beijing for its human rights abuses, global influence operations and economic practices.

“This is likely going to be a period of continuing uncertainty on the US-China front,” said Myron Brilliant, the executive vice president of the US Chamber of Commerce. “There is no question that President Trump has adopted a tough stance on China, and this probably doesn’t give President-elect Biden a lot of political flexibility early on, but we expect a significant departure in tone, style and process.”

Biden has given few details about his plans for US-China relations, other than saying he wants to recruit US allies such as Europe and Japan to pressure China to make economic reforms, like protecting intellectual property. He has pledged to devote more resources to enhancing American manufacturing capacity, infrastructure and technological development, to ensure the United States retains an edge over China even as it invests huge sums in fields like telecommunications, artificial intelligence and semiconductors.

But Biden will face pressure from both parties not to revert to the approach that he and many of his predecessors had earlier embraced in trying to transform China’s economic practices by bringing it into the global economy.

Like many Democrats and Republicans in the 1990s and early 2000s, Biden argued that integrating China into the global trading system would force Beijing to play by international rules, to the benefit of US workers. In 2000, he voted to grant China permanent normal trading relations, which paved the way for China’s entry into the World Trade Organization and deeper global economic ties.

In 2016, Trump won the presidency in part by loudly rejecting that approach, arguing that the United States needed to isolate, not integrate, Beijing.

Biden acknowledges that China exploited the international system, and he has called for a more aggressive approach. Biden has said the United States must get “tough with China,” and referred to Xi Jinping, the Chinese leader, as a “thug.”

Congress is also relatively unified on taking a tough stance on China. Hundreds of China-related bills are circulating, including several bipartisan efforts that echo Biden’s emphasis on competing with China by investing in US industries like quantum computing and artificial intelligence.

Biden’s first moves on China could also be dictated by Trump’s last months. Many trade experts say they are concerned Trump, who has promised to make China “pay” for not doing enough to contain the coronavirus, could amp up his economic fight. Several of Trump’s aides are bitter at China for its role as the source of the coronavirus, which they see as a major contributor to Trump’s loss, people familiar with their thinking say.

One area of focus is the trade deal that Trump signed with Chinese officials in January. While China has largely kept commitments to open up its markets to US companies and Trump’s advisers have continued to defend the pact, Beijing has fallen far behind schedule in its promise to buy an additional $200 billion of goods and services by the end of next year.

Trump’s most likely path will be to leave the deal intact, said Chris Rogers, a global trade and logistics analyst at Panjiva. But he wouldn’t rule out “a scorched-earth policy where China is declared to be in violation of its Phase 1 trade deal commitments and there’s a return to tariff escalation. President-elect Biden will be left holding the pieces if the deal is broken,” Rogers said.

And the president shows no signs of backing off a confrontational approach in other areas. On Friday, his administration is expected to begin economic talks with Taiwan that are likely to rankle Beijing. His advisers are considering other measures to punish China in the coming weeks, including sanctions related to China’s security crackdowns in Hong Kong and Xinjiang, where the Chinese government has carried out mass detentions and harsh policing of ethnic minorities.

“We are worried that he’s going to do some rash things that aren’t going to make sense for the future of the country or global stability,” said Rufus Yerxa, the president of the National Foreign Trade Council, which represents major multinational companies. “Given the history of President Trump’s use of executive authority, we’re taking nothing for granted in these next few months.”

Still, “most of what he could do is through executive orders and executive actions, which can be reversed by a Biden administration,” Yerxa added.

Whether Biden opts to roll back Trump’s more punitive measures will depend, at least in part, on China’s future behavior, including whether it pursues more aggressive incursions into the South China Sea, Taiwan and Hong Kong, people close to his campaign say.

Beijing has recently endorsed a policy of greater technological self-reliance and a stronger military to protect itself from a more antagonistic United States, and moved ahead with cementing other economic partnerships. On Sunday, China signed the Regional Comprehensive Economic Partnership, a pan-Asian trade pact that includes Japan, South Korea, Australia, New Zealand, Thailand, Vietnam and other countries, and will help cement China’s image as the dominant economic power in the region.

Biden’s appointments for trade and foreign policy posts could help determine his approach toward China, though it remains unclear whom he might nominate for such critical jobs as secretaries of state and commerce and the United States trade representative.

Similar to Biden himself, many of Biden’s closest advisers have a moderate track record on trade and China, believing they can work with Chinese leaders on some issues even as they challenge them on others. But several of his national security advisers are more skeptical of China.

No matter the path, business groups, economists and others are hoping for a coherent strategy that does not result in the type of economic brinkmanship Trump appeared to thrive on.

While Democrats and Republicans have credited Trump with drawing attention to China’s security threats, and its unfair economic practices like intellectual property theft, his dealings with China have also been transactional and inconsistent. In an attempt to secure a trade deal, Trump lavished praise on Xi, delayed sanctions against China’s human rights violations for months, and pardoned Chinese company ZTE for running afoul of US law. And he has employed racist and xenophobic rhetoric, like calling the coronavirus the “kung flu,” that has fueled attacks on people of Asian descent around the country.

“The Trump administration never did lay out a coherent, comprehensive, engaged trade strategy,” said Thea M. Lee, an economist and the president of the Economic Policy Institute. “It was much more scattershot: Throw up a tariff here, do a deal with China, disparate elements that didn’t seem to talk to each other.”

“But there are a lot of tools in that toolbox, and I would like to see the Biden administration be thoughtful and strategic about how to use them,” Lee said.

Some experts are urging Biden to take a more nuanced approach. In a report to be published Monday, 29 China specialists and other experts, some with close ties to Biden’s advisers, urge US policymakers to better compete with China by strengthening US research and innovation, preserving the openness of American universities and the economy, and taking a more targeted approach to Chinese security threats.

The working group, organized by the 21st Century China Center at the University of California, San Diego, argues that the United States has allowed its technological leadership over China to erode through a lack of funding in research and development, and overreacted to threats from China in a way that has damaged America’s own economic prospects, including severing economic ties with China, and turning away Chinese students and researchers.

Peter Cowhey, the dean of the School of Global Policy & Strategy at the University of California, San Diego, and chairman of the working group, said its primary takeaway was that the United States “must invest and reorganize the US innovation system across the board, including basic research and development and specialized manufacturing capabilities.”

“It’s a lot easier to manage risks with China if we are in an overall robust period of leadership,” he added.