US Election Spotlight – A Biden Administration might be more conventional in style but the US will remain hawkish on technology in US-China trade relations
The stakes of an election for a United States convulsed by division, cynicism, misery and – in certain instances – open season in the streets have scarcely been so great. The outcome will have global implications too. Four years of President Trump’s half-baked worldview has created myriad problems in international relations and global order.
Nowhere has there been a more obvious manifestation of this reality than in the largely fruitless trade war with the Chinese Government (and anyone else that takes the President’s fancy). Much of the attention has focused on advanced technologies. Trump’s obsession with attacking China’s technology sector on national security grounds has made it the primary flashpoint in the news.
He is not alone in his suspicious of Beijing, however. Politically it now proves prudent to take a harder, more adversarial stance on China regardless of which side of the aisle you occupy in congress. Yet with November 3rd looming, the future remains as uncertain as ever. It would be foolish to consider the result of the US Presidential Election as a foregone conclusion – regardless of who you support. So this spotlight will return again to the tech-flashpoint in the broader trade dispute with China, focusing on some of its key components and how a Trump victory, or a Biden one, may determine the outcome of the situation.
China Strategy in Focus
The most obvious contrast between Trump and Biden with regards to their strategic perspectives on China is linked heavily to their styles of diplomacy. Trump is notoriously aggressive, transactional and at times petulant in his approach to international relations – unconventionally tweeting his thoughts in furious rants at 2am. Biden, by contrast, operates within the more conventional parameters of diplomacy. Calmer in tone and generally giving the air of a politician that seeks to be constructive in his approach to international relations, Biden would perhaps return the tone of the US-China narrative to something more resemblant of the Obama Administration in which he served.
There is little reason to expect that the re-election of President Trump would bring with it a departure or change of tact in his strategic approach to relations with China. We may reasonably expect that the Trump Administration will continue in vain to force China to submit to its demands with sanctions, tariffs and divestment of interests in American companies. Should Biden take office, however, a restoration of constructive dialogue will be the likely order of the day. Punitive economic measures and recriminations are the preserve of his potential predecessor.
On the other hand, it would be a mistake to think a Biden Administration would be taken advantage of by Beijing or that it would simply capitulate in face of Chinese aggression. Despite what Trump may argue, the Obama Administration was not “soft” on China’s leadership even if it was unable to achieve far-reaching diplomatic and economic gains vis-à-vis the world’s ascending superpower. The Democratic contender has not specifically outlined a strategic approach towards China on his campaign website but it is prudent to conclude that they will sustain the hawkish approach to Chinese behaviour whilst seeking active engagement on issues such as climate change.
The ‘Phase One’ Deal
The immediate issue tied to the incumbent President’s China Strategy is the ‘Phase One’ Deal – the first agreement in the reorientation of US-China trade relations. The first two chapters of the 96-page agreement are explicitly linked to the technology sector with a focus first on intellectual property rights and their abuse by Chinese companies before moving to the matter of ‘technology transfer’.
In relation to technology transfer, agreement has been reached upon the need for knowledge exchange under voluntary, market-based terms. Under the general obligations of the agreement, neither the US government nor the Chinese government may purposely pressure any enterprise into handing over their technological knowledge, nor shall either party ‘support or direct the outbound foreign direct investment activities of its persons aimed at acquiring foreign technology with respect to sectors and industries target by its industrial plans that create distortion’ (See Agreement Here). To say that these obligations will be honoured on either side seems a little far-fetched in reality. The TikTok saga over the summer and the quite clear “going-out” trade policy of the Chinese government, which has been in place for nearly two decades, evidences as much.
In the related issue of intellectual property, the deal articulates a mutual acknowledgement of the need for further cooperation and, significantly, an acknowledgement by the Chinese government for the need to improve domestic governance institutions. Moreover, an acknowledgement that corruption by party officials in the sharing of sensitive knowledge capital, trade secrets and other confidential business information needs to be curbed.
On these points, both Trump and Biden actually share some common ground. Yet the extent to which these obligations will be met regardless of the election outcome is unclear. The commitment by both parties has to-date been mostly rhetorical. It seems unlikely that Biden, if elected, would be able to untangle these problems in the next four years if he even has the desire to do so.
Tiktok – The Data Elephant
A further component that is in question here is data and the privacy of smartphone users. For this very reason, the world’s most highly valued startup, TikTok (owned by ByteDance), has entered President Trump’s crosshairs this year. In one of the perhaps more extraordinary moves by his administration, the President has essentially forced ByteDance into selling equity to US giants, Oracle and Walmart, in a deal jumbled together in a matter of weeks. This remarkably bold play – and quite ironically anti-capitalist – has been one of the most audacious by the administration, even for one headed by a man who made his bones in the real-estate world of New York in the 1970s and 1980s.
To say that moves such as the one against TikTok would be unlikely to feature in the Biden playbook is an understatement. Not only has the saga been completely beyond the pale for most observers of Presidential politics it has also been largely ineffective, since the deal that has been struck could leave ByteDance still owning as much as 80% of TikTok Global. That said, we can expect to see continued scrutiny of Chinese business activities in the United States if there is a Democrat in the White House next January.
Huawei & the running war over computer chips
Beyond software issues, there is the running battle over semiconductor (computer chip) technology that Chinese vendors like Huawei and ZTE remains heavily reliant upon. Further restrictions on exports from US manufacturers to China were added on Friday, September 25th, citing the “unacceptable risk” exports to Chinese chip giant, Semiconductor Manufacturing International Corporation (SMIC), posed with regards to the dual-use potential the technology holds for military purposes (See Article).
The International Affairs Network has already reported on the relevance this holds for Huawei, who have been bearing the brunt of the Trump Administration’s assault on Chinese tech (See Here). Whilst it holds true from that article that constricting technology exports to the likes of Huawei is a long-term strategic miscalculation on the part of the President, it is a short-term dilemma for Beijing who understand the dependency situation this places their “tech giants” in – or Qia Bozi (being strangled by one’s adversary), as Xi Jinping puts it. As such it is an immediate matter to be resolved for the Chinese government as the US ramps up pressure.
Should Biden accede to the White House then this matter will be an immediate priority for his new administration. The “Chip War”, so-to-speak, is an area of US-China trade relations that possesses the potential to establish some degree of détente between the two powers in the short-term.
Regardless of whether common ground is established o
ver this issue and some of the pressure were to be released on export and import licences, it would not single a wholesale return to the previously accepted norm of “engagement” first developed by Nixon and Kissinger in the 1970s.
Rather, we may expect a Biden Administration to negotiate hard to ensure American security concerns are balanced against the economic incentives for trade. It must not be forgotten that the activism of Trump towards Huawei has now spread to the United States’ allies across the Atlantic. The chorus of hawkish voices surrounding the techno-security complex that is emerging from this trade war currently win out in the US and the EU, which is something Biden would be unable to ignore.
The US election outcome this November may well restore conventional diplomatic practices and norms to the White House if Biden is able to defeat Trump at the ballot box. To suggest, however, that Biden’s election would bring with it a wholesale reversal of Trump’s assault on China’s tech-giants in the past four years would be an error.
