Biden's confused and confusing China policy

Dividing issues with China into a competition bucket and a cooperation bucket won't work.

President Joe Biden has described the United States, indeed the entire world, as being involved in an epic battle between democracy and authoritarianism. Although somewhat overwrought, there are many respects in which this is true.

Despite Russia’s invasion of Ukraine, the authoritarian regime of chief concern is China.

Biden’s description presumes that the character and conduct of China’s regime isn’t subject to change in the foreseeable future. Otherwise, the international geopolitical stakes wouldn’t be so stark and consequential.

There are implications that should flow into U.S. foreign policy from there being a battle between democracy and China-led authoritarianism. But that isn’t fully taking place within the Biden administration. Instead, there seems still to be an emphasis on developing a package of sticks and carrots designed to modify China’s character and conduct. As some Biden officials have put it, to shape the environment in which China operates.

I don’t know whether that is the actual objective or whether it is a circumlocution to avoid flatly declaring that the objective is China’s containment, which is what the epic battle framework would seem to imply and require.

Regardless, the result is a China policy without the feel of having any strategic clarity or direction to it.

A good illustration is a recent speech by Commerce Secretary Gina Raimondo on “U.S. Competitiveness and the China Challenge”.

In it, Raimondo recited the usual complaints about how China manipulates its domestic markets to favor Chinese companies, including through subsidies. She also bragged about how the United States is responding … by doing something very similar.

Specifically, she cited the infrastructure bill, the computer chip subsidy legislation, and the green energy subsidies in the fraudulently named Inflation Reduction Act as providing a cool trillion dollars in taxpayer support for domestic business activity in the United States. 

To the extent the epic battle is, in part, a bid for world opinion, responding to China’s industrial policy with an American industrial policy undermines our case against China’s industrial policy. It becomes, if anything, a difference in degree, rather than a difference in kind. 

The Trump administration imposed a raft of tariffs on Chinese imports. The Biden administration has largely retained them and gone beyond them with stringent export controls on important high tech components and greater scrutiny of the flow of capital in both directions. But, according to Raimondo, the United States isn’t seeking to decouple from the Chinese economy. Indeed, she said, the Biden administration wants to see an expansion of exports, citing particularly personal care products and agricultural goods.

According to Raimondo, the Biden administration wants “to continue to promote trade and investment in those areas that do not undermine our interests or values.” Good luck defining the goods, services, and capital flows that fall on one side of that line and those that fall on the other.

While engaged in an epic battle between democracy and authoritarianism, the Biden administration wants to cooperate with China on some things, particularly climate change. 

According to a recent assessment of China’s military posture by the Pentagon, China “increasingly views the United States as deploying a whole-of-government effort meant to contain (its) rise.”  That is not as true as it ought to be. But given that’s the perception in China, creating and maintaining the Biden administration’s division of issues with China into a competition bucket and a cooperation bucket will inevitably fail. China sees, and will continue to see, all of them as being part of the same bucket. 

Here are some thoughts about what the policy implications of Biden’s generally accurate epic battle framework ought to be.

First, we should seek to decouple our economy from China to the maximum extent possible. Any division between trade that implicates national security or democratic values and trade that doesn’t will be impossible to make consistently or maintain. There should be universal tariffs on Chinese goods high enough to deflect production to elsewhere. Distinctions on export controls are easier to make and inconsistency not as serious a problem.

Rather than pursuing an industrial policy of our own, the United States should pursue, unilaterally if necessary, free trade in goods, services and capital among democracies with market economies. The Biden administration is constantly touting the importance of allies in our geopolitical strategy. But there are a lot of things in the industrial policy provisions cited by Raimondo that favor domestic production and companies and lock out our allies.

In her speech, Raimondo bragged that, in response to Chinese retaliation against Lithuania for diplomatic relations with Taiwan, the United States opened up our markets to it. If there is an epic battle going on, it shouldn’t require a Chinese retaliation to open up the U.S. market to a fellow democratic capitalist country. 

We should be open to bilateral relations and discussions with China. But we should be clear that this isn’t a bargaining chip that China can use. If China wants to cut off dialogue because a speaker of the House visits Taiwan, or some other perceived offense, that’s on them. Our diplomatic door won’t be closed.

To the extent China’s involvement on things such as climate change is important, let other countries take the lead. To China, anything involving the United States is part of the same big bucket of bilateral issues. Other countries will have a better shot at gaining China’s cooperation.

None of this addresses what the United States can or should do to deter Chinese military aggression, particularly against Taiwan. That’s an even stickier, and much more dangerous, issue.

But decoupling the U.S. economy as much as possible from China increases the space to deal with it. At this point, there is nothing about being intertwined with China that is in our interests. 

Reach Robb at robtrobb@gmail.com.