U.S.-China Relations in Tech | Brunswick

U.S.-China Relations in Tech

Biden-Harris Administration's Next Steps on Tech

The Biden administration’s approach toward China may differ in tone, but not in substance. As such, we don’t expect to see too many short-term changes in U.S. policy toward Beijing. The four years of the Trump administration coincided with a hardening of attitudes towards China within the U.S. Congress and national security community that is bipartisan in nature and unlikely to change anytime soon.

Confirmation hearings preview U.S.-China policy. We’ve gotten a preview of the president’s approach to China in the answers given by his nominees during recent Senate confirmation hearings. They have outlined a policy that retains the Trump administration’s goal of confronting the challenges presented by a rising China, but seeks to accomplish the goal of “out-competing” China through coordination across government agencies and with key allies and international organizations. Secretary of State Antony Blinken said that although he disagreed with the way former President Trump went about implementing his policy towards China, “the basic principle was the right one.” This points to an abandonment by the Democrats of the preTrump status quo of trying to accommodate China

Different rhetoric, same approach. Some of the outgoing administration’s harshest edges will be tamed, particularly in terms of public rhetoric, with the new administration expected to be more careful and measured. So although it will continue to signal a willingness to cooperate with China on global challenges such as COVID-19 and climate change, the Biden administration has said it will not offer to ease restrictions on Chinese businesses or reduce tariffs on imports of Chinese goods. In addition, lawmakers in Congress (particularly Republicans) are expected to remain out in front of the administration to push for a hard stance towards China.

Global tech supply chains. For tech, this means a continued focus on policies aiming to maintain American leadership in industries of the future as China implements a focused state-run program, including by limiting the ability of Chinese companies to play in global supply chains.

Entity lists. With respect to restrictions placed on Chinese companies through the Commerce Department’s Entity List and similar lists maintained by other departments, Secretary of State Blinken and Secretary of Commerce Gina Raimondo both indicated in their testimonies that they intend to carefully study the issue before initiating processes to remove any companies.

Huawei. The Biden administration has clearly signaled that it intends to maintain the current restrictions on Huawei. After Raimondo gave an ambiguous answer regarding the policy towards Huawei in her confirmation hearing and was criticized by a number of senators, the White House press secretary clarified that it is the position of the administration that “telecommunications equipment made by untrusted vendors, including Huawei, is a threat to the security of the U.S. and our allies.” The administration indicated its intention to bar equipment from “untrusted vendors” and a desire to work with allies to secure both their networks and to expand their use of equipment made by U.S. and allied companies.

Increased transparency. On the other hand, we can expect at least an attempt at rationalizing the administration’s policies towards Chinese companies, making the decision-making process more transparent and the companies implicated by government action seem less arbitrary. This may, in particular, be to the benefit of companies whose nexus with national security concerns is arguably less direct.

Human rights. One area where the incoming administration is expected to be at least as strict as the outgoing one is the issue of alleged human rights violations by the Chinese government, particularly in Xinjiang. This will result in much closer scrutiny of American companies’ activities in the region.

As noted above, the Biden administration’s ability to foster alignment with key allies in the Indo-Pacific region and the European Union will be key to its ability to develop a credible and effective China policy that goes beyond the Trump administration’s tough rhetoric against Beijing.

KEY PEOPLE TO WATCH:

Kurt Campbell, who was selected as Deputy Assistant to the President and Coordinator for Indo-Pacific Affairs on the National Security Council, signals a potential focus on relationship-building in the region. He recently suggested the creation of ad hoc bodies to address urgent concerns regarding international trade and technology in lieu of large, multilateral trade deals.

Katherine Tai is the U.S. Trade Representative. She was confirmed unanimously, strengthening her position assuming the role. She previously served as chief trade counsel for the House Committee on Ways and Means and has found support on both sides of the aisle for her tough stance on addressing challenges posed by China.

For more insights on U.S.-China relations in the Biden administration, please consult our longer policy paper dedicated to this topic.