US President Joe Biden has continued his predecessor Donald Trump’s hard-line approach to China despite their differences, and Biden believes – as Trump did – that the United States should disengage from Beijing by reducing its dependence on Chinese products and supply chains, for economic and national security reasons.
This is not Biden’s conviction alone. To the disappointment of those who advocate strengthening US-China trade and investment ties, efforts to keep a distance between the two countries’ economies enjoy bipartisan support.
Despite bipartisan support for these endeavors, separating the two countries’ economies seems difficult to achieve, according to an article in the American “Foreign Policy” magazine, by Jeffrey Kosik, assistant professor of law at the University of Arizona, and Rajan Menon, professor of international relations at the City College of New York.
The article says that if the Biden administration is to achieve success, it will not be limited to re-arranging large sectors of its “globalized” economy, but it must also ensure the participation of other countries that are major trading partners and investors with China, goals that will be more difficult to achieve. What many in Washington expect.
The article warned of the consequences of disengaging from China, especially in the economic aspect, and that the administration of President Joe Biden should abandon the pursuit of unilateral policies and work to mobilize countries that have close commercial relations with Beijing to his side.
Biden’s plan
Biden has so far been adopting the Trump administration’s efforts to separate the two economies, albeit with a softer approach. Last June, the White House put in place a comprehensive plan to increase domestic production to reduce dependence on “fragile” global supply chains, especially those from China.
This plan mostly focuses on vital industries such as semiconductors, which the United States has witnessed a sharp decline in its market share in recent decades, as well as rare earth minerals, in which China depends on about 80% of its needs.
Meanwhile, Trump’s tariffs on imports from China kept Biden high, and he took steps to prevent American companies from investing in 59 Chinese companies that have ties to the Chinese military or produce surveillance equipment, some of which are on Trump’s blacklist such as Telecom giant Huawei.
Biden and Democratic members of Congress are also pushing to reduce the United States’ dependence on vital imports from China, while critics of economic disengagement – including the US Chamber of Commerce in particular – warn that separating the two countries’ economies will hamper existing supply chains, exacerbating delays in production, forcing companies and consumers to bear the price increase.
In this context, Biden is facing urgent demands from American companies that they should stop implementing the tariffs prevailing in the era of Trump, whose unilateral action led to the consequences of bearing the brunt of the American economy alone. Consumers in the United States increased by $80 billion in 2018 alone, and resulted in the loss of between 250,000 and 300,000 jobs.
However, the trade deficit with China decreased only by a modest percentage, from $346.8 billion in 2016 to $344.3 billion in 2019.
Is it possible to disengage?
For the disengagement strategy to have any chance of success, Biden must abandon his unilateral policies and mobilize collective action involving countries with significant trading and investment ties with China.
Although the United States and the European Union have re-engaged in efforts to curb intellectual property theft largely blamed on China in areas such as wind turbine software, communications technology and autonomous vehicles, this does not mean, according to a Foreign Policy article, that the European Union In a hurry to disengage from China.
European trade experts believe that this would hinder growth and reduce incomes across the countries of the old continent, and in order for Biden’s strategy to disengage from China to be feasible, Japan, South Korea and other Asian countries that have vital trade and economic relations with Beijing must join it.
In the opinion of the authors of the article, such a strategy is unlikely to prompt China to change its behavior given the difficulties in organizing a cohesive US-led coalition committed to economic disengagement with Beijing.
Moreover, China has tended to reduce its dependence on economic growth led by the export sector, to replace it with the increasing demand for its goods from domestic consumers. political “authoritarian”.
Despite all this, the policy of disengagement still has a silver lining, although it does not have a significant impact on China. Reducing the United States’ reliance on fragile supply chains may help protect the economy from future disruptions like those it suffered in the past two years.
Foreign Policy magazine concludes in its article that investment in local capabilities is long overdue, noting that if the United States can do this and strengthen its partnerships with its like-minded allies, it will be better for everyone.