US Should Continue to Exert Trade, Export Control Leverage Over China, Experts Tell Congressional Commission

China is growing increasingly confrontational on trade issues and may be more willing to respond to U.S. sanctions with restrictions of its own, experts told the U.S.-China Economic and Security Review Commission Sept. 9. As China mulls retaliation against the U.S., the Trump administration should focus on areas in which it has leverage over China by continuing to push for purchases under the phase one trade deal and restrict Chinese attempts to develop advanced technologies, the experts said.

Carolyn Bartholomew, vice chair of the commission, said China is increasingly adopting a “confrontational tone toward other countries,” causing the U.S. and its allies to partner more closely together. She said the European Union, Japan, India and Australia are all working to “diminish their economic reliance” and increase “security cooperation” against China.

As countries determine how best to deal with a more confrontational China, the U.S. should focus on exerting its trade leverage, said Andrew Scobell, a political scientist at the Rand Corporation. He said the U.S. should “continue to press” China to follow through on its purchase commitments, adding that trade is one of the major issues in which both countries share a common interest. “In an environment where there's tremendous distrust … it's really hard to make progress in any area,” Scobell said. “Let’s start with following through on the trade deal, where we already have some traction, and try and build from there.”

The U.S. should also exert its leverage in the technology sector, experts said. Although China is trying to become technologically self-reliant, it still heavily depends on international components and talent for critical technologies, which is where U.S. export controls become effective, said Dexter Roberts, an Atlantic Council expert. He said China cannot fully decouple from the U.S., and other strategic rivals, until it makes significant leaps in its ability to develop sensitive technologies, such as advanced semiconductor equipment.

“China faces the real risk that development of its science and technology stalls as export controls, and its own renewed focus on going at it alone, limits its access to international talent and technology,” Roberts said.

But countries should not assume China is far from achieving its goal of being technologically independent, said Kerry Brown, a Chinese studies professor at King’s College London. He said China is making quick progress on emerging technologies, a category of exports that the U.S. Commerce Department is focused on restricting (see 2007160021). “China is no longer in a technology deficit in a lot of areas,” Brown said. “Our mindsets are often that China is somehow technologically behind. But in [artificial intelligence] and other areas, it really isn’t.”

As China continues to indigenize advanced technologies, and countries continue to split on whether to accept telecommunications infrastructure from Huawei (see 2007150042), Scobell said the world may be broken into two technology hemispheres.

“We're on a trajectory towards two worlds, where you have one world that is dependent and consumes the U.S. and Western technology, and the other consumes Chinese technology. And the process of that creates tremendous dislocation for our companies and countries around the world,” Scobell said. “Are we ready for that? Can we avoid that? I think that's a fundamental question.”