Recent US diplomacy push aimed at China meant to soften blow of coming hi-tech export limits: analysts

In another closely watched meeting that wrapped up recently, US Treasury Secretary Janet Yellen sought to reassure her counterparts in Beijing during her talks there that the Biden administration was trying to keep further restrictions on exports linked as closely as possible to domestic national security concerns and to limit the economic damage they might cause.

This issue is top of mind for Biden officials, who do not want a repeat of the steep downward spiral in bilateral relations that ensued when the Pentagon shot down a Chinese balloon suspected to have been spying on sensitive US military installations earlier this year, said Anna Ashton of Eurasia Group, a political risk consultancy.

“The Biden administration’s thinking it probably can’t hurt to ramp up engagement at the same time that they’re planning to roll out these restrictions,” Ashton said. “The restrictions were in the works … and with diplomacy under way, there’s far less chance of the restrictions being deeply misunderstood.”

The coming restrictions would apply to exports of advanced semiconductor chips to China, reportedly including the Nvidia A800 graphics processing unit.

The products affected “have stayed focused on AI, quantum [computing], and chips tied to the defence industrial base in China”, Ashton said, with room for reducing restrictions further “pretty slim”.

While largely agreeing with the assessment that the Biden administration’s fast-footed engagements with Beijing are meant to soften the blow that new restrictions will cause, Taylor Loeb of research firm Trivium China questioned whether the efforts prevent further deterioration in the relationship.

“Through recent meetings, the administration would love to get to a point where they can continue implementing economic restrictions on China without those restrictions deleteriously impacting other areas of cooperation,” Loeb said.

“While these meetings might stabilise the relationship in the near-to-medium-term, it’s hard to imagine them resulting in a material reversal of the downward trajectory, given that there’s no indication that the US plans to stop efforts to restrict China’s tech development,” he added.

Future restrictions, Loeb said, could include “anything that benefits China’s military and/or pushes forward China’s development at the technological cutting edge”.

“That means areas like quantum computing, AI, cloud computing, aerospace, to name a few,” he said.

But military-to-military communication has remained shut off, despite repeated calls from the US and other countries to resume exchanges amid deepening tensions around Taiwan and in the South China Sea.

Beijing rejected a US request for a meeting between defence chiefs Lloyd Austin and Li Shangfu during the Shangri-La Dialogue defence forum in Singapore early last month, and Blinken’s landmark trip to Beijing just weeks later made no progress on this front.

The top US diplomat’s June 18-19 trip – marked by meetings with top Chinese officials including President Xi Jinping – was closely watched as he was the highest-ranking American official to visit mainland China in about five years.

Xi told Blinken then that the world needed a stable US-China relationship, and that the two countries should handle strained ties responsibly.

The Wang-Blinken meeting on Thursday was a positive sign for Sino-American relations, according to Alfred Wu of the National University of Singapore

Wu said both top diplomats were likely to have stressed the importance of keeping lines of communication open to prevent frayed ties from sliding into conflict.

The talks proved that the two world powers had “moved on from confrontation … to a stage of reviving communications to better manage differences and establish guardrails”, added Wang Yiwei of Beijing’s Renmin University.

There has been greater engagement between the two rival powers since Blinken’s visit to Beijing, after ties were tested in recent months over multiple issues, including sharpening strategic competition and alleged Chinese surveillance balloons flying over US territory, which saw Blinken postpone a planned trip to Beijing in February.

Yellen said she had held “direct, substantive and productive” discussions with China’s new economic team during her visit last week to Beijing. She also said her trip had helped put Sino-American relations on a “surer footing”.

US climate envoy John Kerry is slated to be the next senior American official to visit China. His expected four-day trip starting Sunday comes almost a year after Beijing suspended climate cooperation over Pelosi’s visit to Taiwan.

Wu said the high-level meeting in Jakarta was in part aimed at paving the way for a potential meeting between Xi and Biden at diplomatic forums later this year.

The two leaders previously met on the sidelines of the G20 summit in Bali in November.