Trump’s administration launched a sea change in U.S.-China relations. Is Joe Biden raising the stakes in taking tough action against China?

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U.S. President Joe Biden at the NATO summit in Brussels, Belgium, 14 June 2021 (EPA Photo/Kenzo Tribouillard).

President Joe Biden’s administration accused Beijing this week of plotting with hacker gangs to carry out thousands of cyberattacks in the West, further straining ties between the world’s biggest economies.

Joining to condemn such cyber threats in a string of coordinated statements on July 19 were the 30-member North Atlantic Treaty Organization (NATO), the European Union, Australia, Britain, Canada, Japan and New Zealand.

Washington’s blast was the most specific and harshest toward Beijing, blaming its Ministry of State Security (MSS) for a major attack on a Microsoft email system used by thousands of corporations worldwide.

At the same time, the U.S. Justice Department announced that a federal grand jury in San Diego, California, had charged four Chinese nationals, allegedly working for the MSS, of hacking into computers seeking trade secrets as well as infectious disease research, from dozens of companies, universities and government agencies in the United States and abroad between 2011 and 2018.

Microsoft had said back in March that a China-linked cyber-espionage group had been plundering email inboxes using freshly discovered flaws in the company’s mail server software.

The U.S. and countries around the world are holding China accountable “for its pattern of irresponsible, disruptive, and destabilizing behavior in cyberspace, which poses a major threat to our economic and national security,” U.S. Secretary of State Antony Blinken said in a statement. He announced no sanctions, however, unlike the practice toward Russia, another frequent target of U.S. cyber complaints.

The MSS, an intelligence and secret police organization, “has fostered an ecosystem of criminal contract hackers who carry out both state-sponsored activities and cybercrime for their own financial gain,” Blinken said.

China’s foreign ministry spokesman Zhao Lijian dismissed the charge as “fabricated out of thin air” for political purposes.

“China will absolutely not accept this,” he told reporters in Beijing without giving any indication of possible retaliation. China does not engage in cyberattacks, and the technical details Washington has provided “do not constitute a complete chain of evidence,” he said.

Most consequential U.S. foreign policy shift in 50 years

The thrust and parry over keyboard-launched strikes took place against the backdrop of the most consequential U.S. foreign policy shift in the 50 years since former U.S. President Richard Nixon went to what Americans then called “Red China.”

Earlier this month, the Biden administration slapped new sanctions on Beijing over human rights and warned U.S. businesses about what it described as a tough new landscape for doing business in Hong Kong, actions that China denounced as ill-intentioned.

Part of a geopolitical sea change sparked by his predecessor Donald Trump, the latest moves underline that the U.S. has shifted to intense competition and confrontation with Beijing after a decades-long policy broadly described as “engagement.”

Biden’s push, bolstered by a show of allied support, may trump Trump in taking tough action toward China. At issue are rubs over trade, technology, human rights, national security, Hong Kong, Taiwan, the South China Sea, Xinjiang, Tibet and deep-seated distrust across a wide range of other issues.

Taken together, the new U.S. administration’s policies are shaping up to be at least as confrontational as Trump’s, if less dramatic.

Trump’s aides launched a trade war after the Republican assumed office in 2017, sought to curb technology transfer and vilified the ruling Chinese Communist Party (CCP), notably over the outbreak in Wuhan of COVID-19 . Trump called it the “Chinese virus.”

In a significant show of support for Biden and concern about Beijing, leaders of NATO’s 30 members said in a communique after a summit last month that China presents “systemic challenges to the rules-based international order and to areas relevant to alliance security.”

The new U.S. president had urged fellow NATO states to stand up to Beijing’s increased assertiveness and growing military might — a change in focus for a political and military alliance that was built to defend Europe from the Soviet Union during the Cold War. Trump had disparaged the Western alliance as obsolete.

Biden’s National Security Advisor, Jake Sullivan, has acknowledged that forging a common position on China with European allies is challenging “because we don’t have entirely aligned perspectives.” Even trickier could be crafting a joint strategy with East Asian allies and partners, including Japan, South Korea and the Philippines, given their geographic proximity and tight economic ties to a rising China.

United States’ latest slap includes warning about Hong Kong

The fresh U.S. slap at Beijing was in response to China’s year-long crackdown on anti-government protests in Hong Kong, a British colony that was returned to Chinese sovereignty in 1997. A U.S. warning to business last week raked over a strict 2020 Chinese national security law that it said had endangered employees of foreign companies, data security and the rule of law.

“As a result of these changes, (U.S. businesses) should be aware of potential … legal risks associated with their Hong Kong operations,” said a July 16 joint notice from the Treasury, State, Commerce and Homeland Security departments. It cited, among others, the risk of being caught dealing with U.S.-sanctioned entities or individuals.

China dismissed the actions on Hong Kong as bullying with “despicable intention.”

A fear of running afoul of U.S. sanctions could have a chilling effect on U.S. and other foreign business in Hong Kong and in China. Foreign banks operating in Hong Kong have been on a hiring spree, keen to cash in on the mainland’s continuing fast economic growth — as much as 7.9% in the last quarter, year on year, according to official Chinese figures — despite the downward spiral between Beijing and Washington.

Kurt Tong, the U.S. consul general in Hong Kong from 2016 to 2019, said the way things are playing out in Hong Kong demonstrates just how hard it will be for Washington and its partners to carry out a comprehensive “strategic competition” with China, given the lure of the giant China market.

“The United States’ inability to make China regret — much less reverse — its transgressions in Hong Kong suggests that financial separation, sanctions and economic barriers are less reliable tools than many in Washington believe,” Tong wrote in a July 14 piece in Foreign Affairs.

“Washington and its partners should lower their expectations and abandon the illusion that the right mixture of punishments will prompt a reversal in Chinese policy,” Tong wrote.

China remained the United States’ largest goods trading partner in 2020, its third-largest export market and its largest source of imports, a February report by the Congressional Research Service said. Many U.S. companies have vast operations in China, both to sell to the country’s 1.4 billion people and to take advantage of lower-cost labor for export-oriented manufacturing.

In addition to the advisory, the Treasury Department added seven officials from China’s main liaison office in Hong Kong to a sanctions list that already included many of the territory’s top officials, including Hong Kong leader Carrie Lam and senior police. The move blocked any assets in the U.S. financial system and put businesses and individuals on notice not to deal with them.

The sanctions are tied to what the U.S. considers the rollback of a “one country, two systems” promise. It was a Chinese vow at the time of the hand-back of Hong Kong, enshrined as a constitutional provision, to allow Hong Kong a high degree of autonomy for at least 50 years.

That promise had underpinned Hong Kong’s privileged trade status with the U.S., separate from the rest of China. The Trump administration determined that Hong Kong no longer qualified, ending the special status last year.

Chinese officials maintain that the “one country, two systems” model remains in place and that Hong Kong is about to resume its perch as the “Pearl of the Orient” for East-West trade, now that what they regard as foreign-stoked dissent has been crushed.

United States issues warning about doing business in Xinjiang region.

Three days before hitting Hong Kong, the Biden administration struck at what it has deemed to be China’s genocidal policies against mostly Muslim Uighur and other ethnic minorities in northwestern China’s Xinjiang region.

Building on a Trump-era genocide finding, the administration asserted that an entire supply chain was tainted by forced labor and other human-rights abuses in Xinjiang, which produces more than four fifths of China’s cotton and one fifth of global supplies.

At the same time, an expanded multi-department U.S. notice told Western businesses to end any remaining supply-chain and investment links in Xinjiang — or face a “high risk” of violating U.S. law.

“The United States will continue to promote accountability for the PRC’s atrocities and other abuses through a whole-of-government effort and in close coordination with the private sector and our allies and partners,” Blinken said in issuing the updated notice to businesses.  PRC is short for People’s Republic of China, the country’s official name.

Beijing denies alleged human rights abuses and says it has established vocational training centers in Xinjiang to deal with what it considers religious extremism.

The new sanctions and warnings underscored the steps that are under way to cut U.S. economic interdependence with China — 20 years after having cleared the way for it to join the World Trade Organization in 2001.

Nixon had set the stage for cooperation between the radically different political systems in 1972, when he went to a then inward-looking China and said in an icebreaking toast: “If we can find common ground to work together, the chance of world peace is immeasurably increased.”

Steps toward “decoupling” of U.S. and Chinese economies

Nearly 50 years later, the relationship is a wreck.

A “decoupling” likely would scramble everything from technology and security standards to global networks and supply chains. U.S. companies would lose hundreds of billions of dollars if they slashed investment in China or the nations increased tariffs, the U.S. Chamber of Commerce said in a February report estimating the cost of a full decoupling.

In a related move last week, the Federal Communications Commission, an independent U.S. government agency, wrapped up a $1.9 billion plan that will help smaller, rural U.S. telecommunications carriers pay to “rip and replace” technology from the Chinese telecom gear makers Huawei and ZTE.

Successive U.S. administrations have alleged that Shenzhen-based Huawei and ZTE are closely tied to the Chinese government and obligated to comply with any military and intelligence agency requests to share sensitive user data under a 2017 Chinese national intelligence law.

China moves forcefully on the world stage.

In the name of protecting China’s “core interests,” Chinese leader Xi Jinping has forcefully pursued China’s ambition to resume a leading role on the world stage since coming to power in late 2012.

Among other things, he has built military outposts in the contested South China Sea, stepped up shows of military strength around Taiwan and embraced a brand of so-called “Wolf Warrior” nationalism that critics say will produce a more aggressive, isolated and autocratic China.

By contrast, his immediate predecessors held that China should bide its time, with a steady expansion of influence through slow integration into the existing global order. Deng Xiaoping, the architect of modern China after the death of founding leader Mao Zedong, had famously counseled in favor of “crossing the river by feeling the stones.”

Xi, for his part, is “impatient with the status quo, possesses a high tolerance for risk, and seems to feel a pronounced sense of urgency in challenging the international order,” Jude Blanchette, a China expert at the Washington-based Center for Strategic and International Studies, wrote in Foreign Policy magazine’s latest issue.

Early in the new U.S. administration, Biden’s call for reopening a review of how the COVID-19 pandemic started — and whether it leaked from a lab in Wuhan — angered officials in Beijing. China’s leaders were also disappointed at the new administration’s decision to leave trade tariffs imposed by Trump in place and to keep dormant what had been a regular, high-level strategic and economic dialogue until Trump suspended it in 2018.

Biden has accused Beijing of challenging U.S. “prosperity, security and democratic values” and urged allies and partners to “prepare for long-term strategic competition with China.”

Blinken has described Beijing as “engaged in conduct that blunts our technological edge, threatens our alliances and our influence in international organizations, and is designed to make America and its allies more dependent on China, and China less dependent on America and our allies.”

Could the U.S. and China come to blows?

Fears that the contest between rival political systems could escalate into military conflict are increasingly front and center, particularly over Taiwan, a key node in computer-chip and other high-tech global supply chains and home to 23.6 million people. Beijing regards the self-governing island as a breakaway province that must return to the fold, by force if necessary.

Xi, the most powerful Chinese leader in generations, marked 100 years of his Communist Party on July 1 with calls to brook no interference on China’s path to becoming a superpower after a rapid rise from crushing poverty and a so-called century of humiliation at the hands of foreigners.

The Chinese people “will never allow any foreign force to bully, oppress, or enslave us,” said Xi, clad in a gray Mao suit atop the Gate of Heavenly Peace in Beijing’s Tiananmen Square. “Anyone who tries to do so shall be battered and bloodied from colliding with a great wall of steel forged by more than 1.4 billion Chinese people using flesh and blood,” he said.

He reaffirmed the Chinese Community Party’s “unshakable commitment” to resolving “the Taiwan question and realizing China’s complete reunification.” In March, then-Commander of U.S. Indo-Pacific Command Admiral Philip Davidson testified that China’s threat to Taiwan could be “manifest” in the next six years.

Biden deepening ties with Taiwan

With the United States as Taiwan’s arms supplier, Taiwan and the mainland have steered clear of outright blows since the Chinese civil war ended with a Communist victory and revolution in 1949. The defeated Nationalist forces fled to Taiwan, across a strait from the mainland that is 81 miles wide at its narrowest.

Keeping the peace may be increasingly tricky as Beijing pushes harder for unification and builds a military honed to take the island by force if Xi deems it time.

Three days after Biden took office in January 2021, the State Department announced that his administration would be “deepening our ties with democratic Taiwan.” It said the United States would “continue to support a peaceful resolution of cross-strait issues, consistent with the wishes and best interests of the people on Taiwan,” and characterized the U.S. commitment to Taiwan as “rock solid.”

In his first phone call with Xi on February 10, Biden voiced concerns about China’s “increasingly assertive actions in the region, including toward Taiwan.”

The coordinator of Biden’s approach to China made clear that he expects the current U.S. emphasis on confrontation over cooperation to endure for decades.

“Do I believe that China and the United States can co-exist peacefully?” White House coordinator for Asia and Pacific policy Kurt Campbell said on July 6 at a forum hosted by the Asia Society. “Yes, I do. But I do think this challenge is going to be enormously difficult for this generation and the next.”

What is China’s view of the conflict with the U.S.?

The CCP contends that the United States seeks to weaken its grip on power, stir domestic unrest and keep China down.

“In Chinese eyes, the most significant threat to China’s sovereignty and national security has long been U.S. interference in its internal affairs aimed at changing the country’s political system and undermining the CCP,” wrote Wang Jisi, president of the Institute of International and Strategic Studies at Peking University.

The one-party state is increasingly confident that by 2030, China’s economy will finally eclipse that of the United States as the world’s largest in terms of gross domestic product at market exchange rates.

“China has gone through the stages of standing up and getting rich and is now advancing to the stage of becoming strong,” wrote Yan Xuetong, dean of the Institute of International Relations at Beijing’s Tsinghua University. He said Beijing’s initial hopes that a Biden administration would ease tensions with China have been “dashed.”

China is working on multiple fronts to make itself less vulnerable to “U.S. aggression and pressure,” he added. Chinese leaders have called for dialogue and cooperation while warning the United States to stay out of China’s “internal affairs.”

On February 2, China’s top foreign affairs official, Yang Jiechi, urged the United States to “respect China’s positions and concerns” on Taiwan; “stop interference” in Hong Kong, Tibet, and Xinjiang affairs; and “stop attempts to hold back China’s development,” calling those issues “a red line that must not be crossed.”

Both countries are keen to avoid war, and each side blames the other for the downturn in ties.

The CCP’s official line remains that bilateral ties should be guided by the principle of “no conflict, no confrontation, mutual respect and win-win cooperation,” as Xi put it in his first telephone conversation with Biden as U.S. president. Limited cooperation continues in areas of common interest, such as climate change and North Korea.

But neither Beijing nor Washington shows any interest in accommodating the other, and China is keen to regain what it views as its rightful place on the world stage, said Malcolm Riddell, a former U.S. intelligence covert operative and Harvard scholar who publishes CHINADebate, an online newsletter that gathers what it calls the world’s best thinking on China.

“Intertwined economic, business, and financial interests may delay the collisions — (there will be many before perhaps a catastrophic one),” he said by email. “But in the end, geopolitical imperatives surrounding China’s rise and America’s opposition will override these interests.”

Questions to consider:

  1. In which ways are Biden’s policies toward China even tougher than Trump’s?
  2. How does China view the downturn in its relations with the United States?
  3. Do you think war can be avoided? Why or why not?

Jim Wolf covered breaking news in some 30 countries over 40 years for major international news organizations including AP-Dow Jones, Agence-France Presse, Jane’s Defence Weekly and Reuters. As a Washington correspondent for Reuters for 26 years, he focused on East Asia security issues, the U.S. spy world, nuclear proliferation, terrorism, missile defense, cybersecurity and high technology. He was based by turns in Paris, New York, Bangkok, Washington D.C. and, as a professor of journalism, in Shanghai.

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WorldAsiaBiden doubles down on Trump’s moves to confront a rising China