The Future of U.S.-China Policy Under the Biden Administration
Daniel Russel Keynote Speech to the U.S. – China Business Council Forecast 2021 Conference
The following is the full text of ASPI Vice President Daniel Russel's prepared remarks, which he delivered as a keynote speech to the U.S. – China Business Council Forecast 2021 Conference.
Many thanks for that introduction and for the chance to address the U.S.-China Business Council on the prospects for the Biden Administration’s China Policy.
Having had a lot more contact with business leaders since I left government, it’s become clear to me that the insights of executives and entrepreneurs who have practical business experience in China is a vastly underutilized resource for policymakers and analysts.
That said, my background is foreign policy, not business, economics, or trade…or fortune-telling. So, let me lower the bar at the very outset when it comes to predictions, which – as Yogi Berra famously pointed out – are especially hard when they are about the future.
However, there’s actually a lot that we already know about the shape and trajectory of China policy under the Biden Administration and there are various clues that are hiding in plain sight.
Some of the evidence can be found in Biden and his nominees’ themes and public statements or testimony. Some of it can be seen in the actions taken or not taken in his first two weeks in office.
For example, the calls that they’ve made have been primarily to allies – not to Xi Jinping, Wang Yi, or Liu He.
And the avalanche of Executive Orders that Biden has signed have dealt almost exclusively with domestic issues. None have had to do with trade, and he’s made clear that he’s in no hurry to tackle new trade deals.
Other things are common knowledge or common sense – i.e., that the Biden team wants to restore rationality and order in diplomacy, including with China; that they will dial down the invective and will take a more predictable and less bombastic approach; that they will try to communicate with Beijing through more effective channels than Twitter and will be more subtle and results-oriented than bombarding Beijing with insults and speeches calling for the overthrow of the Chinese Communist Party.
It is also commonly understood that while the tone will change and the tradecraft will improve, the problem-set in the U.S.-China relationship will be essentially the same. That many of the same tools will be employed by the new administration… but perhaps with more recourse to the scalpel than to chainsaws and hand grenades.
Another factor that doesn’t seem likely to change is the Chinese side’s refusal to acknowledge that they bear any responsibility for the downturn in relations or have any agency in improving it. Politburo member Yang Jiechi recently gave a talk at another China-related organization in the U.S. Notwithstanding conciliatory-sounding slogans about “non-conflict and non-confrontation, mutual respect and win-win cooperation,” the basic drift of his remarks was that all the fault lies on the American side. It seems clear the Chinese are not budging from the unhelpful “you tied the knot; you have to untie it” approach.
Before we go deeper into prognostication, let me take a step back and make a point based on my own experience:
I’ve been through a number of transitions in my government career. I joined the Obama National Security Council on Jan 21, 2009 – day one. I stayed on as Assistant Secretary of State for the first few months of the Trump administration.
I can tell you that every new administration (probably since Eisenhower) is adamant at the outset that it will correct the idiotic way its predecessor dealt with China. Every new administration comes in vowing to break bad patterns and get better results.
That is undeniably true for the Biden team… but there are some aspects of the current situation that are decidedly unique and will impact their effort in various ways.
Obviously, the world and the nation are in the midst of a catastrophic health emergency—a pandemic—and are grappling with the economic fallout. That’s not trivial. But let me mention four other factors that go into the equation of how U.S.-China relations will play out:
First is that Biden himself and nearly all of his national security, as well as much of his economic team, come into office with extensive experience dealing with China.
That doesn’t mean they are guaranteed success, but it does mean that they have already made most of the mistakes that beginners always make with China and so they will approach the challenge with a bit more savvy, a bit more humility, and a bit more resolve than the first time around.
Second is the significant transformation of the atmosphere in the U.S., among political elites, particularly in Congress, in the business community, among national security professionals, academics, the general public, etc. This undermines some of the guiding principles that previous administrations operated under regarding our approach to China: e.g., engagement, cooperation, compromise, interdependence. And it means that the new administration has far less room to maneuver in its policy approaches.
Third, is the transformation on the Chinese side, which is quite significant. First of all, in Beijing today there is significant anger and suspicion toward the United States among policymakers and the general public. Moreover, in some quarters there is considerable contempt for the U.S. as a spiteful declining power that is hell-bent on harming China’s legitimate interests. This attitude in China has spread and intensified in the last few years.
There is also the transformation that Xi Jinping has helped engineer, by turning China into a vastly more ideological and politically conformist society, by intensifying party control, championing state-owned-enterprises, and tightening controls over the private sector. Internationally, this includes various forms of coercion and leveraging market access both as a carrot and a stick – punishing upstart miscreants like Australia or the NBA. China is pursuing a vastly more activist and competitive set of global policies and behaviors. This isn’t your grandparent’s China!
Fourth is a shift in the broader Asia-Pacific region towards hedging, with greater skepticism toward the United States and suspicion towards China.
Polling shows that negative attitudes towards China have dramatically intensified in the region, in no small measure because of bullying and missteps by Beijing. It also shows a catastrophic drop in confidence in U.S. leadership.
The experience of Asia-Pacific countries with Washington over the past few years means Biden faces an uphill battle to mend fences and win back the trust and confidence of partners who have now witnessed norms and treaties shredded, who have themselves been sanctioned and denounced as freeloaders, and who have watched in horror as American politics and society seemed to go haywire.
Those are some factors that help set the stage, but let’s turn to what we know about the Biden team’s approach to U.S.-China relations.
My list on that question includes the following:
First, I think the key is that the Biden team wants to be smart, methodical, coherent, and integrated in their approach – to think things through before launching. To get “ready-aim-fire” in the right order. That’s manifest in the decision to conduct a careful review of inherited China-related measures, including tariffs.
Related to that, I’d say they are determined to take adequate time to get the policies right. I don’t mean to suggest that they are slow-walking engagement with China. Rather that they are approaching engagement in a deliberate and measured way, focusing not only on the policy but on getting the sequence, level, and messaging right. Spokesperson Jen Psaki used the much-maligned phrase “strategic patience,” which has some unfortunate connotations, but the idea is clear: don’t rush things, don’t act on reflex, and be clear on where you’ll land before you jump out of the plane.
Third, is President Biden’s determination to concentrate on domestic recovery and renewal, but this bears some clarification. It does not mean that they are so consumed with domestic issues they don’t have the bandwidth to deal with foreign policy. The Biden team has repeatedly stressed that foreign policy and domestic policy need to be seen as complementary and mutually reinforcing. There’s a reason a former National Security Advisor (NSA) Susan Rice is in the White House Domestic Policy job, and that the current NSA Jake Sullivan spent much of the last four years working on domestic policy.
Among other things, this reflects President Biden’s understanding that in dealing with a Leninist, authoritarian system like the Chinese Communist Party, it is critically important to operate from a perceived position of strength. And strength doesn’t mean chest-thumping rhetoric and threats. It doesn’t mean that we don’t acknowledge our own problems. It means proving our resilience and showing that the U.S. is getting back on track – that America is yet again demonstrating its amazing capacity to bounce back after a period of turbulence and disarray. In practical terms, I think Biden’s focus on domestic renewal, job creation, promoting manufacturing, and foreign policy for the middle class means that this will be an administration inclined to listen to U.S. business – not just to the My Pillow guy and a casino magnate or two.
Fourth is that the administration is putting a priority on consulting and making common cause with allies and partners. This is inclusivity, not arm-twisting. What Jake Sullivan called building a “chorus of voices,” not recruiting a posse.
After all, working with allies and mobilizing a multinational cohort has been an incredible force multiplier for the U.S. Of course, building and sustaining like-minded coalitions is hard even in the best of times, and these aren’t the best of times. It will not be easy. China is a huge growth market for every country, and if the Biden administration is doubling down on "Buy America provisions" that can make things even harder. But however difficult, it is a priority for the new administration and it’s really a prerequisite to being able to deal effectively with problematic Chinese behavior.
The fifth attribute is taking a rules-based, values-based, approach in foreign policy – i.e., the championing of democratic governance, active multilateralism, equitable rule-setting, and the protection of universal rights and norms. This means contesting the “China model of techno-authoritarianism,” as Tony Blinken named it.
It is not just a matter of denouncing China for human rights offenses and violating international covenants but includes designing appropriate ways to impose costs and to push for accountability. The goal is not to vilify or overthrow the Chinese government, but to discourage or deter its problematic behavior.
Part of this strategy will be reasserting a substantial U.S. role in regional and international institutions. This will no doubt include rule-setting and standard-setting organizations that can have a big impact on both the global business environment and on the quality of life for people around the world.
The last feature of the Biden approach that I will mention is the President’s determination to compete hard in technology – to outcompete China – and to secure America’s historic edge in technological innovation. Jen Psaki said from the White House podium that "technology is at the center of the U.S.-China competition." Part of the agenda for this competition is defensive – the so-called “small yard & high fence.” The administration will need to figure out how to insulate technology that is critical to national security without undermining major companies’ role in the global supply chain.
But at the top of their agenda will be offensive or, more accurately, pro-active competition – in other words, upping our own game. This will require dramatic capacity building in the U.S. – including research and design investment, infrastructure, education, private sector-government-academic partnerships, and so on. As others have pointed out, this can be a “Sputnik moment.” But whereas in that era, military innovation generated commercial technology, the challenge today is that it’s the commercial technologies that have revolutionary military applications and profound national security implications. That makes today a different world and requires that the government develop new approaches.
As President Biden sorts through the detritus of the U.S.-China relationship he’s inherited, he will have to decide what to do about trade tariffs. Tariffs may not work well, and they may come at immense cost to both sides, but they offer leverage, which is a precious resource in international relations. He won’t just give that away.
So, I would not expect the administration to be in a hurry to unwind them, although surely they will look at mitigating some of the damage tariffs are doing to various sectors at home. But reciprocal tariff reduction requires negotiations and horse-trading. And not only does the administration need time to get the right people in place, as I’ve pointed out, they are determined to first think through their objectives, tactics, and sequencing. They have committed to consult and sync up with like-minded partners. They will want to get into a position to negotiate from a stronger position than the one they inherited.
I suspect something similar applies to the Phase 1 trade deal. The U.S.-China Business Council’s recent report makes clear that the deal fell far short of the goals set by Trump when he launched the trade war. It didn’t address the fundamental issues of massive asymmetry in the trading relationship that generate so much friction. The Phase 1 trade deal was in my view basically a half-hearted truce and China is only half-implementing it. But there’s no obvious upside to the administration in walking away from the deal.
Other components of Biden’s “inheritance” include a range of export controls, investment screening procedures, prohibitions, rules, lists, licensing requirements, and so on. Some of these are driven by legislation. Congress has been particularly active on China policy over the past four years. Some came together in the dying days of the last administration and may have been meant to box Biden in. An astonishing number of these measures have not been implemented at all. Many are stuck in agencies, others are out for comments, and some actions, think TikTok, seem to have fallen off the screen or are tied up in litigation. Others are unenforceable or ineffective measures that are more vengeful than chastening.
It, therefore, makes sense that the Biden team is preparing to conduct a careful, methodical review of this tangle of provisions and policies. It is logical to analyze the cost-benefit equation of the various measures; to establish what we are really trying to achieve or to protect against; to ascertain how best to unwind or revamp some of the flawed provisions, and to figure out how to make this a collaborative exercise with other economies in order to achieve a more consistent approach and a united front.
At the risk of stating the obvious, this cogent, methodical, collaborative approach to China policy sounds great, but no plan survives first contact with reality. Even before the Burmese military ousted Aung San Suu Kyi and seized power in Myanmar, the veteran Biden team surely understood that the world has a way of presenting challenges whether they are ready or not.
But after four tumultuous and damaging years, I for one am ready to see how this approach plays out.