One Year of Biden’s Trade Policy towards China: An Assessment

On 20 January 2022, Joe Biden completed one year in the White House as the 46^th and current President of the United States. From the moment Biden announced his candidacy for Presidency on 25 April 25 2019, one of the most speculated issues in the strategic community had been what would be his approach towards the People’s Republic of China. Given the fact that the then Trump administration had launched a full-fledged trade war with Beijing, speculations abound regarding Biden’s trade policy towards China. Hence, a year after Biden’s inauguration, it becomes important to review his administration’s trade policies, specifically vis-à-vis China.

On 4 October 2021, the Office of the United States Trade Representative, part of the Executive Office of the President, issued a press release that elaborated Biden-Harris administration’s tentative approach towards China. Titled ‘The Biden-Harris Administration’s New Approach to the U.S.-China Trade Relationship’, the press release (termed as fact sheet) underlined three critical considerations for the administration vis-à-vis China. It included: i) discussing the performance of China under the ‘Phase One agreement’, wherein Beijing had agreed on commitments such as committing to additional purchases of U.S. industrial and agricultural goods; ii) while ensuring ‘Phase One’s’ enforcement, the administration will restart the U.S.’ targeted tariff exclusion process to mitigate the effects of certain Section 301 tariffs[i]; iii) raising concerns over Beijing’s non-market policies and practices that distorted competition; and, iv) consulting and coordinating with the allies and partners and strengthening the global market. While this approach appeared to be accommodative towards China on trade matters, experts like Jeffrey A. Bader, opined that it was a continuation of the Trump administration’s tough approach.

The Biden administration in fact has often highlighted the bipartisan support that favours a tough stance towards China. However, a poll conducted by the Chicago Council on Global Affairs think tank shows a different reality. According to the poll, although 42% of Republicans view China as an adversary, only 17% of Democrats hold the same perception. Furthermore, only 39% of Democrats feel the necessity of limiting China’s global influence as one of the pertinent goals of American foreign policy, whereas 73% of the Republicans share this sentiment. A similar wide gap exists when it comes to tariffs, with 83% of Republicans believing that tariffs should be increased. However, only 45% of Democrats believe the same, whereas; the rest 50% clearly oppose the tariffs.

Of course, like any issue, when it comes to China too, there are divisions within the Biden-Harris administration. Noted journalists like Bob Davis of Politico have highlighted the existence of three groups  within the administration. First is the group which believes that the traditional nationalist labels won’t fit as they agree on all the engagements that are multilateral; plus, they have not taken any action regarding revoking Trump’s tariffs. The second group is of the trade expansionists who advocate stronger U.S.-Asia trade ties. Interestingly, Secretary of Treasury Janet Yellen, Secretary of Commerce Gina Raimondo, and Secretary of State Antony Blinken are perceived as members of this group. This also includes a fraction of people like the current U.S. Trade Representative Katherine Tai, who believes that the welfare of the workers should not suffer at any cost. The third group views the trade policy through the prism of politics and believes that aggressive trade policies with regard to China might compromise other important U.S. interests such as ensuring supply chain resilience.

The result of these fractions is inaction. Even though policy options are debated, set to announce and implemented, they are pulled back at the last minute due to the differences between these three groups. Davis calls it vapourware China economic policy. Vapourware is a term used for computer products that are announced to the general public but are delayed or never actually manufactured, nor officially cancelled. Something similar tends to happen in the Biden administration where no major policy change has been initiated despite a lot of debate.

Looking back at the U.S. approach towards China since the past two decades, the current confusion seems inevitable. In the decade of 2000s, the U.S. pursued two strategies to deal with China. First was the multilateral strategy in which Washington intended to include Beijing in the global trading system. The underlying U.S. assumption behind this approach was that entangling China in the global trading system would make it a ‘responsible stakeholder’. The second strategy entailed using tariffs, sanctions and other restrictive measures to dissuade China from engaging in economic malpractices. However, both the approaches have failed, as per China watcher Edward Alden.

In China also, Biden’s trade policy alterations do not seem to be warmly welcomed. According to Global Times, the Chinese Communist Party’s mouthpiece, “The Biden administration continues the strategic positioning and general framework of the Trump administration in terms of China policy. It even further expands its strategic perception of China, calling China the world’s ‘biggest geopolitical test of the 21st century’.”

However, scholars like Robert A. Manning, opine that Biden’s trade policies have fallen prey to the war between ‘interests’ and ‘values’. According to him, the decoupling between Washington and Beijing on the fronts like tech trade has fundamentally affected the bilateral ties. Besides, in a welcome move, U.S. firms have begun working on diversifying supply chains, thereby reducing dependence on China. Although the efforts undertaken so far might seem minimal, the output generated cannot be termed as insignificant, especially after the Biden-Xi summit of November 2021 where Biden was vocal in his criticism of China’s human rights violations and economic practices that affected American industries and workers.

Determining the tone and tenor of the China policy will remain a major challenge for the rest of the term of the Biden-Harris administration. Ensuring that things turn advantageous for Washington will be their major concern. There is no doubt that a fresh thinking regarding China is essential. The U.S. can partially achieve this by re-engaging with Asia and enhancing bilateral as well as multilateral trade engagements with countries so that it benefits both Washington and its allies. Lastly, revitalising the World Trade Organization (WTO) is crucial for a better global economic order Washington must pay attention and work on prioritising the WTO’s pending appointments and putting in funds. All of these might help the Biden-Harris administration to achieve its policy objective of crafting a better response to deal with China.

Dr. Sameer Patil is Senior Fellow, Observer Research Foundation; and Mr. Uday Patil is Dr. T. M. A. Pai Fellow and PhD Candidate, Department of Geopolitics and International Relations, MAHE.