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Rising to the Challenge of China
By Farah Stockman
March 18, 2021
The New York Times
President Joe Biden wasted no time in reversing some of the most damaging foreign policy decisions of the Trump era, rejoining the Paris climate accord and the World Health Organization on his first day in office. But there is one Trump policy that Biden is in no hurry to repudiate: tariffs on Chinese goods.
The Biden administration has not only left the tariffs in place, but it has also placed even stiffer restrictions on companies that sell to Huawei, the Chinese telecommunications equipment giant labeled a national security threat by the Trump administration.
Anyone who hoped that Biden would swiftly and unilaterally throw out the tariffs will be disappointed. When it comes to China, the Biden administration sounds an awful lot like the Trump administration — albeit a more mature, thoughtful and effective version. Trump was a disastrous leader in so many ways, but he is widely seen as having correctly diagnosed the problem with China, even as he bungled the solution. Biden, who understands the importance of allies, has a far better chance of getting it right.
Secretary of State Antony Blinken and Secretary of Defense Lloyd Austin traveled to Japan and South Korea this week, their first overseas trips in their new roles, to signal the importance of those alliances. Blinken, who is meeting with Chinese leaders in Alaska on the way home, called China “the biggest geopolitical test of the 21st century.” He’s right.
For years, many Americans downplayed the challenge that China poses, certain that increased trade would benefit both economies and eventually turn China into a friendlier, more democratic country. But now even some of the staunchest defenders of trade with China acknowledge that they oversold the benefits of bringing Beijing into the global trading system, and that they were naïve to expect a communist country to play by free-market rules.
That became obvious in 2015, when the Chinese government released a strategic plan called Made in China 2025, which outlined how it would use government subsidies and state-owned enterprises to dominate key technologies. Instead of the global economic system changing China, China is changing the global economic system, and the backlash against those changes helped fuel the rise of populism in the United States.
Recognition of this has caused a sea change in the way many influential Americans are talking about China. Even business executives who staunchly oppose tariffs now say they have adjusted to them and have settled into a new normal that they expect to last at least until China fulfills its obligations under the so-called Phase One trade deal struck in 2020. The tariffs have largely taken a back seat to the much larger debate about what the U.S.-China relationship should look like in the coming years, and how the United States can best preserve its technological and military edge in the face of an ascendant China.
American attitudes toward China have taken a sharply negative turn, partly because of the coronavirus pandemic. Beijing suspended the export of face masks — even those produced in Shanghai by Minnesota-based company 3M — at the very moment when Americans needed them most. That woke many U.S. officials up to just how unacceptably vulnerable the United States is after two decades of relying on China to supply a vast array of crucial goods and components.
Instead of lifting tariffs on Beijing, last month Biden announced a 100-day review of supply chains involving critical technologies, including pharmaceuticals and their active ingredients; rare earth minerals, which are used in cellphones; and semiconductors, which are used in cars, computers and all manner of electronics.
“We shouldn’t have to rely on a foreign country — especially one that doesn’t share our interests or our values — in order to protect and provide our people during a national emergency,” Biden said. He thanked a bipartisan group of lawmakers working on the issue, noting that China has become a rare area of bipartisan agreement.
Distrust of China spans the political spectrum. The Senate majority leader, Chuck Schumer, D-N.Y., has been working with Sen. Todd Young, R-Ind., on a bill called the Endless Frontier Act that seeks to preserve U.S. technological primacy by making big investments in artificial intelligence, machine learning and advanced manufacturing. These are important investments in domestic capacity that cannot be left to the private sector alone. Although Americans have long shied away from anything that smacks of a centrally planned economy, there is a growing recognition that technological advantage does not maintain itself, especially in the face of a determined, forward-thinking rival.
Lawmakers in Washington have become particularly unsettled by a shortage of certain types of semiconductors, which is causing delays in automobile production. Much of the world’s supply of a key semiconductor used in cars comes from Taiwan, which lies just 100 miles from mainland China and which Chinese officials consider a rebel province. Last year, Chinese military planes began making daily incursions into Taiwanese airspace after nearly two decades of mostly staying on the mainland’s side of the median line of the Taiwan Strait. That worried U.S. officials who support Taiwan’s right to self-government.
With nearly every electronic device requiring semiconductors, these tiny computer chips are the oil of the 21st century. Americans cannot afford to be complacent about where they come from or whether there will be enough to go around. It is reassuring to know that TSMC, the Taiwanese company that is the world’s largest independent semiconductor foundry, has begun constructing a plant in Arizona and that the National Defense Authorization Act enacted in January provides incentives to the U.S. semiconductor industry. But more must be done.
That is not to say that Americans ought to try to stop China from obtaining the semiconductors that it needs to thrive, or “decouple” the U.S. economy from China’s, as Trump once dangerously suggested. That would be exceedingly costly and would make it more likely that the two countries will end up in a confrontation.
But Americans have recognized the need to be far more thoughtful and strategic about planning for their own economic future. That’s a good thing. Maintaining a military and technological edge requires investments in research, education and infrastructure that many Americans would otherwise be unwilling to make.
Of all the threats that China poses, the greatest might just be its example to the rest of the world of a successful alternative to American democracy, which has been marred by economic inequality, racial unrest and insurrection. To effectively counter China, Americans must get their own house in order and remind the world — and themselves — that democracy can still deliver for ordinary people.