Biden continues China trade ban, shifts emphasis

Biden continues China trade ban, shifts emphasis

The next US President, Joe Biden, does not intend to put an end to the trade war his predecessor started with China any time soon. This is contrary to what analysts expected.

In an interview with the New York Times, Biden says that he has no intention of taking immediate action on the China policy that Donald Trump has put into place. He says he first wants to get a full picture of the current agreements with China and meet with allied countries in Europe and China to develop a “coherent strategy”.

Sanctions remain unchanged

Among other things, Biden mentions the 25 percent tariffs levied on around half of the products imported from China. For the time being, he also wants to maintain the agreement that China would purchase 200 billion of extra US goods and services during 2020 and 2021. China is currently lagging significantly behind in this respect.

Shifting the focus

However, Biden wants to shift the focus in the trade war with China. He believes that we need to work hard on America’s own competitiveness, rather than complaining that China is doing so well in that respect. In order to achieve this, he wants to invest heavily in American research, developments, infrastructure and education. He talks about areas such as energy, biotech, advanced materials and artificial intelligence.

The president-elect does not believe that trade restrictions are a good way to improve the competitive position of the US to China. The reason he still wants to keep the restrictions in place, for now, has more to do with unfair trading practices. Biden talks about the theft of technology, and the Chinese government favouring Chinese companies.

Huawei and SMIC

It is not clear from the interview what Biden’s intentions are with the list of Chinese companies designated by the US as military-backed. Earlier this year, Trump added Huawei to this list, causing the company to face significant trade restrictions. US companies wishing to trade with Huawei now have to apply for specific licences to do so. Qualcomm has now arranged a number of them, but that is not enough to solve the problems Huawei’s woes. Huawei now feels compelled to sell its Honor subsidiary, so that this smartphone business can hopefully once again get access to much-needed parts.

SMIC, a Chinese chip manufacturer, also recently ended up on the list. The company produces chips for Qualcomm, Broadcom and Texas Instruments, among others. Experts initially expected the impact of the restrictions to be limited, under the assumption that Biden would ease the trade restrictions with China to some extent. It is not yet clear what the outlook is now it is known that Biden has other plans.

Tip: To stop China’s world domination, Huawei has to die