The US and China’s Commerce secretaries had an open meeting on easing trade restrictions, but the impasse on chip exports remains.
The United States and China continue to dialogue on trade and export restrictions as tensions between the two countries rise. On Monday, US Commerce Secretary Gina Raimondo visited her counterpart Wang Wentao in Beijing.
The two discussed both countries’ export policies, with concerns regarding struggling domestic businesses. They also agreed on an annual exchange meeting discussing each country’s policy and finding trade compromises. The first meeting will take place in early 2024.
Before Raimondo’s visit, 27 Chinese companies were removed from the US blacklist, allowing them to access American technology. At the moment, over 200 companies remain on the list.
Raimondo’s trip is the third visit to China by a US official, following Treasury Secretary Janet Yellen and Secretary of State Anthony Blinken. The Biden administration is trying to balance between diplomatic talks and technology restrictions on China.
The Republican wing of the US Congress opposes this approach, preferring a much harder stance against China. House Foreign Affairs Committee Chairman Michael McCaul dubbed the strategy "at best naive, but also dangerous."
On the other hand, Biden is receiving pressure from US tech giants who don’t want to see the massive Chinese market slip away. Companies like Tesla and Intel have massive operations in the country that involve confidential technology.
The war on chips
The largest concern for both Commerce secretaries was the impasse on chip exports. Microchips are crucial technologies for digital devices but are also used in modern military equipment.
The United States is the leading country in chip technologies and considers its curb against Chinese exports a matter of national security. Jake Sullivan, the US national security advisor, has called restrictions on chip exports a “new strategic asset”.
During the meeting, Wang openly criticized the US strategic restrictions, but Raimondo cut the conversation short by saying they were not open for debate.
The issue of semiconductors also involves the US foreign policy, as 92% of the world’s microchips are produced in Taiwan. The de-facto independent country off the shores of mainland China is increasingly under threat of Chinese aggression. Beijing has made no secret that it wants to reunite with the island, finally ending the Chinese Civil War.
The United States is a close Taiwanese ally, constantly pledging for the protection of the island. At the same time, the Taiwanese chip factories prevent China from ever reaching the same technological level as the United States.
China could never hope to build chip factories that can compete with Taiwan. They have tried, but the technology is so complex and well-guarded by Taiwan’s authority that they always fall behind expectations.
And the United States wants to keep it this way, no matter how many diplomatic talks are engaged with China.
