On November 30, 2022, US Secretary of Commerce Gina Raimondo gave remarks at the Massachusetts Institute of Technology of the 50th anniversary of economic relations between the US and China. Her speech set out the Biden Administration’s economic strategy in light of the US Administration’s views that the Chinese government is 1) “increasing the role of the state in society and the economy”; 2) “constraining the free flow of capital and information”; 3) “decoupling economically in a number of areas, including many technology sectors of the future”; 4) accelerating efforts to “fuse their economic and technology policies with their military ambitions”; and 5) “using non-market trade and investment practices.”
The Secretary identified the following economic priorities for the US:
- Ensuring that the US builds the talent, technologies, and manufacturing capabilities necessary to lead the global economy in the 21st century—to be at the forefront of global innovation in an era of unprecedented technological change and competition
- Providing the workforce with the education and training necessary to compete for the jobs of the future
- Safeguarding national security and democratic values
- Growing in ways that reflect US values of sustainable and inclusive growth, as well as openness, transparency, and the rule of law
Secretary Raimondo went on to identify a four-part strategy to accomplish the above economic priorities:
- Making transformational investments in American innovation
- Bolstering domestic capabilities and creating new ones to prevent China from undermining US national security and democratic values
- Partnering with allies in new ways to advance shared values and shape the strategic environment in which China operates
- Advocating for US trade and investment and the benefits that come with it, as well as working together with China to address transnational issues, such as climate change and global macroeconomic stability
The Secretary recounted the ways in which the Biden Administration has already worked on this strategy, such as passing legislation over the past 20 months that represents “over $1 trillion of investment in America”; the Administration’s effort “across the government and with leading university and industry experts to identify and invest in core critical and emerging fields of technology,” including advanced computing, biotech and biomanufacturing, and clean energy; and revitalizing US domestic manufacturing. She also repeatedly emphasized the importance of the private sector to accomplishing these goals.
Looking to the future, the Secretary proclaimed that the US is not only going to invest in “technologies of the future” but also will manufacture that technology in the US. The Secretary identified three “families” of technology the Administration believes will be particularly important over the next decade: 1) computing-related technologies, such as microelectronics, quantum information systems, and AI; 2) biotech and biomanufacturing; and 3) clean energy technologies.
Focusing on national security specifically, she pointed to updated export control policies1 and investment screening frameworks2 as ways in which the US is “redoubling [its] efforts to safeguard [its] core technologies[.]” In addition, the US is working to protect its critical supply chains, the vulnerability of which was exposed during the height of the COVID-19 pandemic. In response, the US is “working with the private sector to re-shore or friend-shore core parts of [its] supply chain” and developing a real-time picture of global supply chains for critical industries so that the US can timely address any new vulnerabilities. Secretary Raimondo added that another way the country is protecting its national security is by reducing US “companies’ dependence on China for core parts of our critical supply chain.” The Secretary then briefly touched on the Administration’s prioritization of “ensuring that [US] companies are not complicit” in China’s alleged human rights abuses before turning to the responsibilities of the private sector in helping the government realize its economic and national security objectives.
Much of the last third of the remarks focused on how the US must also work with partners and allies to outcompete China. According to the Secretary, her counterparts in other countries have voiced “similar concerns about . . . China’s direction” and are “adjusting their strategies accordingly.” These shared concerns have led to cooperative efforts like the establishment of the Quad Critical and Emerging Technologies working group with Japan, Australia, and India; the US-EU Trade and Technology Council;3 and the launching of the Indo-Pacific Economic Framework. The US is also trying to work more closely with economics of the global south, such as the collaboration of the US Exim-Bank, US businesses, and the government of Angola to develop a $2 billion solar project, which not only addresses clean energy concerns but also supports US exports.
While the Secretary stated that the Chinese government “employs a range of economic practices that disadvantage foreign companies trying to compete” in the Chinese market, she emphasized that the US is not seeking to “decoupl[e] our economy from that of China’s.” She recounted how trade between the US and China has increased from $4.7 million in 1972 to $750 billion today, and that China is currently the United States’ third largest export market. This trade relationship, she explained, is important to the success of American companies and American workers. The US goal is to “promote trade and investment in areas that do not threaten our core economic and national security interests or human rights values,” such as supporting smaller businesses navigating the Chinese market while protecting their IP. She also reiterated the desire for the US and China to work together on “issues of global economic importance,” including climate change and debt relief. She concluded by remarking that the US has “championed the benefits of a” trade relationship with China, but “sustaining these benefits over the long term requires that we defend our security and values in the near term.”
1 See https://www.mayerbrown.com/en/perspectives-events/publications/2022/09/recent-actions-by-commerce-department-reiterates-its-increases-enforcement-of-export-restrictions-on-china and https://www.mayerbrown.com/en/perspectives-events/publications/2022/11/sweeping-new-us-semiconductor-related-export-controls-on-china?utm_source=vuture&utm_medium=email&utm_campaign=%7bvx:campaign%20name%7d