"WASHINGTON -- The Biden
administration is preparing to confront China on its industrial subsidies and
seek ways to protect America's edge in new technologies, hardening U.S.
economic policy toward the nation's chief global rival.
U.S. efforts to be rolled out in
coming months could include a new investigation into Beijing's support for
sectors it considers strategic, using Section 301 of the Trade Act, according
to people familiar with policy discussions.
Section 301 is a powerful tool
allowing U.S. officials to single out certain practices of a trading partner
and take punitive action should they determine those practices violate trade
law. While the people didn't cite potential targeted sectors, China has
identified semiconductors, artificial intelligence, 5G wireless and electric
vehicles as areas where it seeks global leadership.
The White House is also weighing
more scrutiny of U.S. companies' investments in China, tighter export controls
on sensitive technologies and greater cooperation with European and Asian
allies and partners on subsidies and other issues, these people said.
The Office of the U.S. Trade
Representative said in its annual policy agenda on Tuesday that it is
realigning its China policy to confront Beijing's nonmarket practices but
didn't provide new details on specific measures.
"It is apparent that existing
trade tools need to be strengthened, and new trade tools need to be
forged," the USTR said in a Feb. 16 report to Congress.
The changes will allow President
Biden, a Democrat, to distance himself from his Republican predecessor's trade
policy, which resulted in a "phase one" trade deal with China in 2020
and remains largely intact.
"We are seeing increasing signs
of their own distinctive approach," said Scott Kennedy, senior adviser at
the Center for Strategic and International Studies, of White House officials.
While the administration has been
considering a potential new 301 case for some time, the new initiative comes as
efforts to build on the phase-one deal have stalled, with high-level U.S. and
Chinese officials no longer in close communications on trade, according to
people close to both sides.
Relations between the two countries
eased with the signing of the trade deal in 2020 but have since soured over
issues including the Covid-19 pandemic, Taiwan and China's crackdown on Muslim
ethnic groups.
Chinese leaders are frustrated that
Washington has largely left the Trump-era tariffs in place while expanding the
list of Chinese technology companies subject to blacklisting over their alleged
support for China's military and Beijing's mass surveillance of ethnic groups.
A fresh 301 investigation could have
severe repercussions, according to some Chinese officials and government
advisers, who say China might respond with retaliatory measures -- including
adding U.S. companies to its "unreliable entity" list barring them
from the Chinese market.
"Hundreds of Chinese companies
are on the U.S. government's entity list these days," said a government
adviser in Beijing. "But China has refrained from putting any U.S. firms
on its entity list."
Chinese President Xi Jinping doesn't
want relations with Washington to become outright hostile, the officials and
advisers say, but has little motivation to compromise on key issues at the
heart of the strained bilateral ties.
Despite signing of the 2020 trade
accord, the Trump administration kept 25% tariffs on approximately $250 billion
of Chinese imports and 7.5% tariffs on $120 billion of Chinese imports.” [1]
China needs world leadership in semiconductors. Russia was just cut off from Western semiconductor sources with sanctions. What a coincidence for China ...
1. U.S. News: U.S. Moves to Confront China on Trade
Hayashi, Yuka; Wei, Lingling; Leary, Alex. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 03 Mar 2022: A.2.