What Happened to the China-US Focus on Trade?

For much of the Trump administration, the central issue in China-U.S. relations was trade. President Donald Trump’s obsession with the trade deficit inspired a cascading series of sanctions on Chinese exports to the United States; China retaliated in kind. At nearly every interaction between the two sides, those sanctions were the center of discussion – China wanted them gone, and the U.S. wanted China to offer something substantial in return.

The two sides reached a deal in January 2020, which was dubbed the “phase one” trade agreement in a nod to the fact that discussions were supposed to continue in subsequent “phases.” But then the pandemic unfolded, the bottom dropped out of U.S.-China relations, and Trump lost his re-election bid.

Over two months into the Biden administration, U.S.-China ties are as tense as ever, but one thing has changed: Trade is at the bottom, rather than the top, of each side’s respective agenda. That’s even more curious because the Biden team has quietly left in place all of Trump’s sanctions on Chinese goods. Instead, both sides have become consumed by strategic issues and, for the Biden administration, a focus on China’s human rights violations in Xinjiang and Hong Kong.

As an illustration of the contrast, the first high-level U.S.-China meeting of the Biden administration involved Secretary of State Antony Blinken and National Security Advisor Jake Sullivan meeting China’s top two diplomats in Anchorage, Alaska on March 18 to 19. There was no high-level economic representative present on either side, a far cry from the days of the Trump administration, when U.S.-China exchanges were spearheaded by the treasury secretary and U.S. trade representative. Instead, the focus of the talks was purposefully strategic and political.

Sullivan explicitly said ahead of the meeting that economic issues would be on the back burner in the Anchorage talks. “I don't expect that, for example, the phase one trade deal is going to be a major topic of conversation next week,” he said during a press briefing on March 12. “This is our effort to communicate clearly to the Chinese government how the United States intends to proceed at a strategic level, what we believe our fundamental interests and values are, and what our concerns with their activities are.”

When economic tension did feature, there was more focus on Australia-China trade than economic ties between China and the United States. Blinken mentioned “economic coercion toward our allies” in his opening remarks on March 18, as did Sullivan; that was their only nod toward economic or trade issues before talks started.

In the post-discussion press statements from Blinken and Sullivan, trade was mentioned as part of a laundry list of issues discussed, also including Iran, North Korea, and climate change. The summary from China’s Ministry of Foreign Affairs likewise relegated economic ties to one point on a longer list of topics: “economy and trade, military, law enforcement, culture, health, cyber security, climate change, the Iranian nuclear issue, Afghanistan, the Korean Peninsula and Myanmar, etc.”

This lack of emphasis is somewhat puzzling. It’s very clear that the United States remains deeply concerned about economic issues, from China’s technological ambitions to the old bugbears of trade restrictions and IP theft. “Beijing’s coercive and unfair economic practices” topped the list of “fundamental concerns” President Joe Biden shared with President Xi Jinping in their inaugural phone call back in February.

Going further, the 2021 Trade Policy Agenda issued by the U.S. Office of the Trade Representative in March highlighted that “China's coercive and unfair trade practices harm American workers, threaten our technological edge, weaken our supply chain resiliency, and undermine our national interests.” It mentioned the usual issues: forced technology transfers and IP theft; restrictions on market access to U.S. firms in certain sectors; and overproduction and “dumping” of certain commodities. Added to that was a new “top priority”: China’s alleged use of the forced labor of Uyghurs and other Muslim minority groups.

“The Biden administration is committed to using all available tools to take on the range of China’s unfair trade practices that continue to harm U.S. workers and businesses,” the document added. However, the specifics of the policy will have to wait for the completion of a “comprehensive review of U.S. trade policy toward China” currently underway.

Until that review is complete, Biden officials won’t have much to say to their Chinese counterparts. That was a point made by Sullivan in his pre-trip briefing, when he said he had been getting “a lot of questions from folks about whether we’re going to get into detail of negotiating some of the specific issues that are outstanding in the U.S.-China relationship. And our own view is that we’re simply not there yet.”

Besides its internal review, the Biden team is focused on bringing allies on board before it dives back into economic issues: “We have more work to do with our allies and partners to come up with a common approach, a joint approach, before we go sit down point by point with the Chinese government on these issues,” Sullivan told reporters in the same briefing. To that end, he previewed the China-U.S. discussions in a call with counterparts from France, Germany, and the United Kingdom on March 16.

Meanwhile, it seems that trade issues are less of a priority for China as well – not because Beijing no longer cares, but because even crucial economic questions pale in comparison to to the sensitive, sovereignty-related issues the United States has been focusing on over the past year. Simply put, Beijing will prioritize defending its polices in – and, by extension, its rule over – Xinjiang and Hong Kong over essentially anything else. As long as the United States continues to harp on these issues, trade will take a back seat for China.

In that context, it’s telling that Xi didn’t specifically mention trade issues, including the remaining U.S. tariffs on China, in his call with Biden (at least according to the official readout from China’s Foreign Ministry). But the ministry’s summary did say: “The Taiwan question and issues relating to Hong Kong, Xinjiang, etc. are China's internal affairs and concern China's sovereignty and territorial integrity, and the U.S. side should respect China's core interests and act prudently, Xi stressed.”

Likewise, non-interference was the first prescription Foreign Minister Wang Yi had for restoring U.S.-China relations in a speech on February 22. “First, it is important to respect each other and not to interfere in each other's internal affairs,” he declared. “This is a basic norm governing international relations.” Only toward the end of his remarks did Wang get around to urging the United States to “remove unreasonable tariffs on Chinese goods, lift its unilateral sanctions on Chinese companies and research and educational institutes, and abandon irrational suppression of China's technological progress, so as to create necessary conditions for China-U.S. cooperation.”

It was also clear from the Anchorage talks that China’s most urgent message to the United States was to drop the issues of human rights, Xinjiang, and Hong Kong.

As Cui Tiankai, China’s ambassador to the United States, put it in an interview just before the meeting, “When its core interests are involved, China has no room to back down. This position will also be clearly articulated in the dialogue.”

In Yang’s lengthy broadside to open the dialogue, trade and economic issues merited just a single sentence, compared to whole paragraphs dedicated to counter-attacking U.S. concerns on rights issues related to Xinjiang and Hong Kong.

Based on what we’ve seen so far, it’s clear that trade and economic disagreements no longer top the agenda for U.S.-China relations. If that holds, it would represent a major shift in the way the relationship is framed. The Trump administration was not alone in prioritizing economic concerns, although the extent and tone of its complaints was certainly novel. For decades, especially since the 1990s, economic issues have been front-and-center in the U.S.-China relationship. As a case in point, the first mechanism for U.S.-China high-level talks was the Strategic Economic Dialogue, headed by the Bush administration’s treasury secretary. Under the Obama administration, that was expanded to include the secretary of state as well, but economics was given equal weight in what was rebranded the Strategic and Economic Dialogue.

So far, under the Biden administration, the U.S. approach to China has been all strategic, with economic discussions only a minor footnote. With both sides de-emphasizing their economic ties – often referred to as the “ballast” that stabilizes overall relations – U.S.-China relations are moving into uncharted waters.