Tuesday, May 28, 2024


Dhaka Tribune

How Biden took Trump's China policy and raised the stakes

  • Donald Trump won praise and flak for trying to hold back China's advance
  • Rather than roll back his policies, the Biden administration has piled on more pressure
Update : 12 Mar 2024, 03:03 PM

Containing the rise of China — then already threatening to dethrone the United States as the world's largest economy — was a key campaign promise by Donald Trump ahead of the 2016 US presidential election.

Citing Beijing's unfair trade practices that included dumping cheap products on the global market, obstructing access to China's domestic market and stealing intellectual property, Trump vowed to levy tariffs on his Asian rival and bring manufacturing jobs back to the US.

The first measures started to take effect a year into Trump's presidency, initially on Chinese solar panels and washing machines, before expanding to thousands of Chinese-made goods. The massive policy shift stunned Beijing, which responded with tit-for-tat measures on American goods.

Pressure on China grows under Biden

Fast forward to 2021 and the Biden administration was expected to undo most of what were widely seen as Trump's policy errors. Instead, the Democrat president held firm, keeping most of the tariffs in place.

He then imposed export controls on US high-tech products, including more recently on advanced semiconductors or chips used to power artificial intelligence (AI) platforms and military hardware.

"Biden has raised the stakes against China, bringing it to a new level," Michele Geraci, professor of finance at New York University (NYU) Shanghai, told DW. "While Trump was mostly looking at rebalancing the trade deficit, Biden has made containing China more of a philosophical and political issue."

Joe Biden has faced little of the criticism that Trump did over his approach to China, despite several studies showing that the tariffs hurt the US economy. The US-China Business Council found that nearly a quarter of a million American jobs were lost as a result of the policy.

"Once you set tariffs on China, it is very hard politically to remove them because you can be accused of being too soft," Antonio Fatas, a professor of economics at INSEAD Business School, Singapore, told DW. "I think Biden made the political calculation that it was better to keep them."

The Republican president had acted in typical Trump style — unilaterally — believing that America's allies didn't perceive China's threat as seriously as his administration, or that some — like the European Union — may be too slow to act.

Biden roped in allies to contain China

Once Biden took office, geopolitical events took over, including the Taiwan issue, which prompted the Democrat president to vow that the US military would defend the island in the event of a Chinese invasion. Biden then called in US allies for backing.

"You've seen a much more multilateral approach with Biden in lockstep with the EU and our Asian allies," said David Sacks, a fellow for Asia studies at the Washington-based Council on Foreign Relations (CFR).

Sacks told DW that the US position in Asia is much stronger under Biden, citing stronger trilateral cooperation between the US, Japan and South Korea, and a similar security pact between the US, UK and Australia named AUKUS, which involves helping Canberra to acquire nuclear-powered submarines.

"US-Taiwan security cooperation has also increased to a level never seen before. So, if you're a policymaker in Beijing, I don't think that you can be comfortable with the dynamics in the region under Biden," he added.

Chip embargo will stall not halt China's ambitions

Biden's chip embargo, first announced in October 2022 and expanded to include cutting-edge AI chips late last year, prevents semiconductors designed by US chipmakers from being sold to China.

Beijing has made technological dominance a key plank of the country's future economic growth, but the country is believed to be 10 to 15 years behind the US in terms of advanced chip design.

While US policymakers hope to maintain that advantage, the embargo has only emboldened Beijing, which has committed $250 billion over the next decade to domestic chip production.

"The embargo on chips and other high-tech goods is completely backfiring," Geraci believes. "China just says 'If you don't sell it to me, I'll make it myself.'”

The NYU Shanghai professor told DW that China's investments in chip production will reduce the gap to around 5-8 years, but worse still, the US will have lost a key export market for its chips.

"Washington thinks it's a zero-sum game; that if China wins, the US will recede. But this is wrong. We don't want to stifle their growth or we will both lose," Geraci said.

Who does Beijing want in the White House?

As to whether China would prefer a second term for Trump or Biden, Sacks thinks Beijing will prefer continuity with the Democrat incumbent, rather than the possibility of up to 60% tariffs on Chinese goods threatened by Trump.

"The Chinese don't like Biden's policies towards China, but they have figured out what they think the next four years will look like. But with Trump, his unpredictability left them uncomfortable. The Chinese are still fairly conservative and they don't like uncertainty,” he told DW.

INSEAD's Fatas thinks China can expect more US trade curbs if Biden is reelected, as Washington will continue to seek to contain Beijing's economic and military ambitions.

"Will these restrictions go away in a [Biden] second term? I doubt it. Will it get a lot worse? Possibly. If China stirs trouble relating to Taiwan or Russia that hurts US interests. Then, you will see a momentum for more sanctions."

NYU Shanghai's Geraci, meanwhile, believes a Trump win would be better for US-China relations, telling DW: "At least they have common ground on which they can talk. But with a second Biden term, China cannot change its [authoritarian] political system to please the US."

Top Brokers


Popular Links