US Looking to Sharpen Export Controls, Investment Screening to Meet China Challenge, Blinken Says
The U.S. plans to build on and improve its export controls and investment screening measures to keep China from acquiring sensitive technologies, Secretary of State Antony Blinken said. Blinken, in a speech outlining the Biden administration’s China policy, also urged industry to reassess whether the price of doing business in China is worth the benefits and to work with the administration to push back against Beijing's unfair market practices.
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“I'm determined to give the State Department and our diplomats the tools that they need to meet this challenge head on,” Blinken said during a May 26 event hosted by the Asia Society. The U.S. needs to ensure the “next wave of innovation is unleashed by the United States and our allies and partners,” Blinken said, and plans to use novel trade and investment restrictions to protect American technologies.
“That includes new and stronger export controls to make sure our critical innovations don't end up in the wrong hands,” Blinken said, as well as “sharper investment screening measures to defend companies and countries against Beijing's efforts to gain access to sensitive technologies, data or critical infrastructure, compromise our supply chains or dominate key strategic sectors.” He also said the U.S. needs “greater protections for academic research,” so universities can innovate in an “open, secure and supportive environment for science.”
These tools and restrictions are necessary because Beijing is hoping to “put itself at the center of global innovation and manufacturing,” Blinken said, which would raise its self-sufficiency while also increasing other countries’ technological dependance. “Beijing is going to great lengths to win this contest,” Blinken said, pointing to Chinese efforts to take "advantage of the openness of our economies to spy, to hack, to steal technology and know-how to advance its military innovation and entrench its surveillance state.”
Blinken also doubled-down on previous government requests for more help from industry, saying the American business community should not be sacrificing its “core values” to enter or sell to the Chinese market. “We’re counting on businesses to pursue growth responsibly, assess risk soberly, and work with us,” he said, “not only to protect, but to strengthen our national security.” Commerce Department officials have urged academia and companies to help it impose effective export controls on emerging and foundational technologies (see 2204080033 and 2205050019), and Bureau of Industry and Secretary Undersecretary Alan Estevez earlier this week urged businesses to consider diversifying away from China (see 2205250037).
Blinken said Chinese companies have “for too long” benefited from “far greater access” to U.S. markets than American companies have in China, pointing to China's forced technology transfers and unfair government subsidies. “This lack of reciprocity is unacceptable,” Blinken said, “and it's unsustainable.”
He also said many Chinese companies make “little” effort to control pollution or protect workers’ rights, which has kept their costs low, especially within the steel industry. “China now accounts for more than half of global steel production,” Blinken said, “driving U.S. companies as well as factories in India, Mexico, Indonesia, Europe and elsewhere out of the market.” He said China has used the same model in the solar panel and electric car battery industries.
Blinken said the U.S. plans to continue pushing back against China’s “market-distorting policies,” including unfair subsidies and market-access barriers. He also said the U.S. will increase collaboration with other countries to stand up against China’s “economic coercion and intimidation,” and to ensure American technologies don’t facilitate human rights abuses.
But he also said the U.S. isn’t pursuing decoupling from China. “The United States does not want to separate China's economy from ours or from the global economy,” Blinken said. “We want trade and investment as long as they're fair and don't jeopardize our national security.”
The U.S. will continue to maintain “people-to-people ties” with China and wants to work with Beijing on a range of issues, Blinken said. He also said the State Department will build a new China team to “coordinate and implement our policy across issues and regions, working with Congress as needed.”
“In short, we'll engage constructively with China wherever we can, not as a favor to us or anyone else, and never in exchange for walking away from our principles,” Blinken said. “I've never been more convinced about the power and the purpose of American diplomacy or sure about our capacity to meet the challenges of this decisive decade.”