As the first and second leading world economies respectively, the US and China have had a long history of ‘strategic rivalry’. The boom in trade between the two countries in the 90s, when China became a major trading partner and a significant destination for American investment, created a growing concern within the US of trade imbalances and negative impact on certain local industries.
By the time President Trump left office in 2021, US relations with China were even more strained. Despite negotiating and signing the Phase 1 deal with China which dealt with some of the bigger trade concerns each country had, the Trump administration took a firm stance on national security issues related to China. This included targeting Chinese telecom giant Huawei and raising concerns about Chinese influence in critical infrastructure and academic institutions. The relationship between the two countries deteriorated further with the COVID-19 outbreak and President Trump’s criticism of China’s handling of the pandemic.
While his language and demeanor might be less ‘school-yard combative’, President Biden has adopted a similarly cautionary approach to relations with China and has been working hard since coming into power to protect US geopolitical interests. It seems that US relations with China might be one of the few bipartisan issues that unite both sides of the political spectrum in the US.
With a fresh round of US presidential elections coming up in 2024, it is an opportune moment to review the trade war, particularly where President Biden and the Republican favorite Ron DeSantis stand on trade with China moving forward.
Biden’s America: China Must Be Stopped
It would seem that the era of (somewhat fragile) cooperation between the US and China is coming to a shaky standstill. Biden’s administration is vociferously pursuing a strategy to limit China’s dominance, particularly in the technology industry, a rather dramatic break from US policy of the past thirty years.
In order to limit what is seen by the US as China’s economic and political rise, Biden has implemented a “Protect and Promote” strategy.
- In order to protect American interests, a range of executive orders and rules are being implemented that aim to slow down Chinese technological and economic development. Among these new measures is what has been termed a ‘draconian’ trade rule, the Foreign Direct Product Rule (FDPR), which is, in part, aimed at stopping chipmakers globally from supplying advanced computer chips to China. There is also an executive order creating federal authority to regulate U.S. investments in China (the first time the federal government will have that kind of ability to interfere in American industry) and bipartisan agreement on steps to screen investment in China and restrictions on the use of Chinese software and applications in the US (hence the Tik Tok wars).
- Working alongside these ‘protect’ initiatives is Biden’s agenda to promote US competitiveness. This involves implementing policies and legislation aimed at promoting US economic growth, including reducing inflationary pressures and maintaining price stability in strategic high-tech areas. For example, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, is a piece of legislation aimed at bolstering the domestic semiconductor industry in the US by providing financial incentives and funding to encourage domestic semiconductor manufacturing and R&D. It includes provisions for grants and tax credits worth hundreds of billions of dollars to support the industry.
While the high-tech industry is on the Biden administration’s target board right now, they aim to roll out the ‘Protect and Promote’ strategy to other major sectors such as biotechnology and clean energy – two industries where the US is reluctant to let China take the lead.
What Would Ron DeSantis Say?
While Biden’s approach to trade and cooperation with China might seem harsh, there are those who want an even tougher stance toward Beijing. Governor Ron DeSantis appears to be one of them. The Florida government website stated that Governor DeSantis has signed three bills “…to counteract the malign influence of the Chinese Communist Party in the state of Florida.” – a definite escalation of hostility and a call back to the Cold War era where a US fear of communism led to such things as the McCarthy Hearings.
As governor of Florida, DeSantis has made his position related to relations with China very clear. The three key pieces of legislation in Florida that he passed include the following:
- Prohibits Chinese entities from buying agricultural land, land near schools or critical infrastructure, or land near military bases in Florida.
- Prohibits any sensitive data from being stored on servers that are in any way associated with the Chinese Communist Party.
- Eliminating any Chinese influence in the Florida education system by, among other things, prohibiting the acceptance of any gifts from Chinese entities by any employees of educational institutions in Florida.
- Blocks access to what he considers dangerous apps such as Tik Tok on any government or educational servers or devices.
Clearly, Governor DeSantis sees China as a major threat to America, both economically and culturally. He takes the idea of competition between the US and China beyond that of simple trade agreements and makes it into an ideological war that impacts every aspect of American life – from trade and education to US beliefs and way of life.
Should he win the Republican candidacy for president, it is certain that relations with China will be an important platform for him, and that attempts to curtail trade between the two countries will be amplified.
Is The China-US Trade War Just Hotting Up?
However you look at it, it is likely that 2024 is going to bring heightened measures from the US to reduce the amount of trade taking place with China, particularly in the high-tech sector (with other important sectors to follow). It is likely that customs processes will become increasingly complex as further measures are put in place by both sides to protect their own economies and promote development locally. Should we see Governor DeSantis make a successful run for President, there is no doubt that anti-China rhetoric and sentiment will escalate significantly.
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