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US rejects China's appeal to ease export controls even as both sides agree on resolving trade disputes

Both sides agreed to set up new channels to resolve trade disputes and convene experts to hold technical discussions regarding strengthening the protection of trade secrets and confidential business information.

Aveek Banerjee Edited By: Aveek Banerjee Beijing Published on: August 30, 2023 16:22 IST
US Commerce Secretary Gina Raimondo during her visit to
Image Source : AP US Commerce Secretary Gina Raimondo during her visit to China

During her high-stakes trip to Beijing to revive deteriorating relations, US Commerce Secretary Gina Raimondo on Tuesday rejected an appeal by Chinese leaders to reduce American export controls on technology that can be possibly used for military purposes. US President Joe Biden had earlier issued an order to restrict US investment in Chinese companies that are involved in military development.

Biden's executive order has limited access to processor chips and other US technology, threatening the Chinese government's ambitions to develop artificial intelligence and other industries, crippling the smartphone business of Huawei Technologies Limited.

Raimondo said that Chinese leaders, including Premier Li Qiang, asked to reduce export controls on technology and the retraction of Biden's order, AP reported. "Of course, I said no. We don’t negotiate on matters of national security."

The US Commerce Secretary further pointed out that American companies have complained to her on facing a "whole new level of challenge" in China following an expansion of an anti-spying law and raids on consulting firms. "We need that to be addressed. Any one of those could be addressed as a way to show action."

Notably, a research firm Mintz Group was fined $1.5 million earlier this month on charges it improperly gathered data.

Both sides agreed on new channels to resolve trade issues

However, the US and China have reportedly agreed on setting up new communication channels to address lingering trade disputes followimng a meeting between Raimondo and Chinese Commerce Minister Wang Wentao on Monday. According to the Chinese daily Global Times, Wang held “rational, candid and constructive” talks during the second day of the latter's visit.

The Chinese Commerce Ministry (MOFCOM) said in a statement that Wang raised serious concerns over various US policies aimed towards China, such as semiconductor policies and sanctions on Chinese firms, and appealed on concrete action from Washington. Although the new communication channels might help in addressing concerns from both sides, there is widespread uncertainty towards an effective resolution of trade disputes between Washingon and Beijing.

Wang emphasised that economic and trade ties are crucial for China-US relations and that Beijing is willing to work with the US based on the principle of mutual respect and peaceful coexistence to provide favorable policy environment for the businesses in both countries and promote bilateral trade and investment, said the MOFCOM in a statement.

The two governments also agreed on Monday to have experts meet to resolves issues related to protection of trade secrets. "That is one of the big things I hear constantly from business, protection of trade secrets," said Raimondo. Raimondo and Wang have agreed to meet once every year and their deputies twice annually to discuss trade issues. They agreed to convene subject matter experts from both sides to hold technical discussions regarding strengthening the protection of trade secrets and confidential business information during administrative licensing proceedings, according to the US Department of Commerce.

Raimondo also met with the official in charge of economic relations with Washington, Vice Premier He Lifeng, who met US Treasury Secretary Janet Yellen in July. "I’m ready to work based on that with you, to make new positive efforts to deepen our consensus and extend our cooperation," he said.

The US Commerce Secretary said that the tone of her meetings with Chinese leaders was positive, but she was realistic about the difficulty of reviving official exchanges and getting results. The Chinese side is also cautious about having too much expectations from the US. 

US-China trade relations

Over foreign investment controls, Beijing accused Washington of "using the cover of risk reduction" to carry out decoupling and chain-breaking. Since then, China has increased its own trade in the Asian continent.

The tension between the two superpowers inflated in 2020 when then-US Speaker Nancy Pelosi visited Taiwan-- a region that China claims is it's own. China showcased maximum aggression against the visit and even warned of a full-fledged war. Beijing also broke off dialogues on military, climate and other issues following the visit. Relations further soured when former US President Donald Trump issued tariffs due to concerns over non-market industrial practices.

Foreign companies have also expressed concerns over the expansion of an anti-spying law that some say leaves them unclear about what consumer and other information they can gather. Beijing has also ordered firms to stop using products from the biggest U.S. maker of memory chips, Micron Inc, on allegations that it failed a security review. This action is believed to be in retaliation for US restrictions on technology access.

Shortly before her visit, Raimondo emphasised that the US administration is not interested in containing the economic development of China and said that it wants the Chinese economy to prosper. She also said that the US does not want to decouple from China's economy in its focus on promoting manufacturing to boost the American economy.

"It's hard to solve problems in any relationship if you don't communicate. And lack of communication results in rising tensions and a spiral to a bad place," Raimondo added, while acknowledging that China has not followed through promised economic reforms and continues to use non-market trade and investment practices.

The economic relationship of the US and China comprises of around $700 million in trade, which makes up for over 50% of the global growth. The Chinese side has also insisted that cooperation between the world's two largest economies is beneficial for their domestic situations as well as developing nations. It is worth mentioning that China is currently facing a deepening economic slump.

Meanwhile, officials from both sides have agreed to hold a “travel and tourism summit” in early 2024 to work on reviving tourism between the two countries. Chinese officials also agreed on Tuesday to resume allowing large tour groups from China to visit the US. 

(with agency inputs)

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