The U.S. & China

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🇺🇸 🇨🇳 Spying greater than Cold War

An Air Force U-2 pilot views China's balloon over the Midwest in February, before it was shot down off South Carolina. Photo: Defense Department via Reuters FBI Director Chris Wray tells the N.Y. Times that the spy war between the U.S. and China is more expansive than the one with the Soviets. Compared to China, "we're vastly outnumbered on the ground, but it's on us to defend the American people here at home," Wray told Julian E. Barnes and Edward Wong. "I view this as the challenge of our generation." What's happening: This year's spy-balloon crisis "reflects a brazen new aggressiveness by Beijing in gathering intelligence," The Times reports. The CIA has hired more China experts and increased spending on China-related efforts while strengthening the U.S. human spy network. 🤖 The other side: Chinese AI software "can recognize faces and detect the gait of an American spy, meaning traditional disguises are not enough to avoid detection." Gift link (paywall-free) to the NYT story.

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🇨🇳 Rise, fall of "world's most successful joint venture"

Production line at an electric vehicle factory in Hangzhou Bay, China. Photo: Lorenz Huber for The New York Times Backdrop for President Biden's meeting with Chinese leader Xi Jinping in the San Francisco area today (2 p.m. ET): Businesses worldwide are adapting their supply chains as the two superpowers shrink their dependence on each other, the N.Y. Times' Peter Goodman writes. Why it matters: The two have been "conjoined in an enterprise so consequential that the economic historian Niall Ferguson coined a term: Chimerica, shorthand for their 'symbiotic economic relationship.'" "No one uses words like symbiotic today," Goodman continues. "Chimerica has yielded to a trade war." "American companies are shifting factory production away from China to less politically risky venues. Chinese businesses are focused on trade with allies and neighbors." The bottom line: "Decades of American rhetoric that celebrated commerce as a wellspring of democratization in China," The Times adds, "have given way to resignation that the country's current leadership ... is intent on crushing dissent at home and projecting military might abroad." Go deeper: What to expect from the Biden-Xi meeting, by Axios China author Bethany Allen-Ebrahimian.

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🇨🇳 Biden and Xi start 4-hour meeting

President Biden and Chinese leader Xi Jinping embarked on a much-anticipated meeting this afternoon that's set to last four hours in a mansion outside San Francisco, Axios China author Bethany Allen-Ebrahimian writes.

• Why it matters: The meeting — Biden and Xi's first in a year — will test whether the two leaders can stop the downward spiral in bilateral relations.

They are expected to announce the resumption of military communications and a deal that will see Beijing crack down on fentanyl production.

• Keep reading ...

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Biden, Xi met for hours and agreed to ‘pick up the phone’ for any urgent concerns: ‘That’s progress’

WOODSIDE, Calif. (AP) — U.S. President Joe Biden and China’s Xi Jinping emerged Wednesday from their first face-to-face meeting in a year vowing to stabilize their fraught relationship and showcasing modest agreements to combat illegal fentanyl and re-establish military communications. But there were still deep differences on economic competition and global security threats.

https://apnews.com/article/biden-xi-apec-san-francisco-58d11e7e3902955302182c2bc41430e0?

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🇺🇸🇨🇳 Xi to Biden: Turning our backs is "not an option"

President Biden met with Chinese President Xi Jinping today at the historic Filoli estate south of San Francisco, where a meticulously choreographed public appearance kicked off their first conversation since last November.

Why it matters: Both leaders are intent on stabilizing U.S.-China relations, which saw tensions escalate after former House Speaker Nancy Pelosi's (D-Calif.) visit to Taiwan in August 2022 and the February downing of a Chinese spy balloon that flew over the continental U.S.

What they're saying: "For two large countries like China and the United States, turning their back on each other is not an option," Xi — whose attendance at the Asia-Pacific Economic summit marks his first to the U.S. in six years — told Biden.

• "It is unrealistic for one side to remodel the other, and conflict and confrontation has unbearable consequences for both sides," he said, making a veiled reference to U.S. attempts to curtail Beijing's human rights abuses, military aggression and coercive economic practices.
• "Planet Earth is big enough for the two countries to succeed, and one country's success is an opportunity for the other."

Biden, for his part, remarked on how long he's known Xi and repeated the administration's long-standing position that U.S.-China competition must not "veer into conflict."

• "I value our conversation because I think it's paramount that you and I understand each other clearly, leader to leader, with no misconceptions or miscommunication," he told Xi.
• The two leaders emerged from their four-hour meeting with agreements to resume military-to-military communications and crack down on China's illicit fentanyl production and export.

1 fun thing: On the menu for the U.S.-China working lunch:

• Herbed ricotta ravioli
• Artichoke crisps
• Tarragon roasted heritage chicken
• Carolina gold rice pilaf
• Charred broccolini and Brussels sprouts
• Almond meringue cake
• Praline buttercream
• Concord grape sauce

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🇺🇸 🇨🇳 Biden, Xi open new lines of communication

Yesterday's successful meeting in the Bay Area between President Biden and China's Xi Jinping could mark a significant thaw in relations, Axios China author Bethany Allen-Ebrahimian writes.

• The superpower leaders seemed to share the belief that the downward spiral in U.S.-China relations over the last several years is unsustainable.
• Xi told Biden: "Planet Earth is big enough for the two countries to succeed."

They met for four hours at Filoli Historic House & Garden in Woodside, Calif. (San Mateo County), on the sidelines of the APEC summit in San Francisco.

• Both said they're committed to building a stronger relationship and working together in as many realms as feasible.

☎️ What happened: Biden achieved the goals he laid out ahead of time, including a resumption of military-to-military contact and an agreement to maintain closer lines of communication with Beijing.

• "[M]iscalculations on either side ... can cause real, real trouble," Biden said.

Biden said they're "blunt with one another so there's no misunderstanding":

• "And in the months ahead, we're going to continue to preserve and pursue high-level diplomacy with [China] in both directions to keep the lines of communication open, including between President Xi and me."

The leaders agreed to crack down on the supply chain for illegal fentanyl, which often begins in China and ends with overdose deaths in the U.S.

• The agreement is aimed at limiting the manufacturing and export of fentanyl precursors from China to Mexico, where it then enters the U.S., Axios' Caitlin Owens and Alison Snyder write.

Reality check: On a much bigger issue, Biden reiterated that the U.S. will keep helping Taiwan try to deter a Chinese attack.

The bottom line: The months of intense diplomacy required to make this meeting happen paid off.

• Meeting takeaways ...

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Pandas, fentanyl and Taiwan — what to know about Biden’s long-awaited meeting with Xi U.S. President Joe Biden and China’s Xi Jinping emerged from their first face-to-face meeting in a year vowing to stabilize their fraught relationship and showcasing modest agreements to combat illegal fentanyl and re-establish military communications. But there were still deep differences on economic competition and global security threats. Read more.

Why this matters: Their meeting has far-reaching implications for a world grappling with economic cross currents, conflicts in the Middle East and Europe, tensions in Taiwan and more.   Biden said afterwards that the meeting included “some of the most constructive and productive discussions we’ve had,” adding that the two leaders agreed to “keep the lines of communication open.”   The agreements helped fulfill the White House’s goal for the meeting — prove to voters that Biden’s dedication to personal diplomacy is paying off.

Related coverage ➤ Chinese president signals more pandas will be coming to the United States Biden promises a better economic relationship with Asia, but he’s specifically avoiding a trade deal Fresh off meeting with China's Xi, Biden is turning his attention to Asia-Pacific economies

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Could America’s giant panda exodus be reversed? The Chinese president’s comments spark optimism Panda lovers in America were given hope when Chinese President Xi Jinping said this week that his government was “ready to continue” lending the animals to American zoos. But it wasn’t certain when or to where the pandas might be coming, although Xi gave a hint that California zoogoers might have reason to celebrate. Read more.

Why this matters: The number of giant pandas in American zoos has steadily dwindled as multiple exchange agreements have expired and not been renewed. Washington’s National Zoo sent its three pandas back a week ago.   Veteran China-watchers have speculated that the People’s Republic is gradually pulling its bears from American and European zoos due to tensions with Western governments over a host of issues.   At a Wednesday dinner with business leaders, Xi called the bears “envoys of friendship between the Chinese and American peoples.”

Related coverage ➤ Take heart, it looks like China could send new pandas to the US China's agreement expected to slow flow of fentanyl into US, but not solve overdose epidemic

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🇨🇳 Axios investigates: China tests U.S. in Pacific

This story by Axios' Dave Lawler is part of a series supported by the Pulitzer Center.

POHNPEI, Federated States of Micronesia — Beijing is persistently courting one of America's closest partners in the Pacific — giving Micronesia the benefit of two superpower benefactors, but prompting fears among local leaders that the island nation could be caught in a superpower brawl.

• Why it matters: As U.S.-China competition grows and tensions intensify over Taiwan, China is pulling new partners into its Pacific orbit. Beijing's focus on a country with deep ties to the U.S. comes as Washington urgently seeks to upgrade its military footprint in the region and remain the preeminent power.

The U.S. controls Micronesia's vast expanse of ocean, and funds much of the country's budget. Micronesians attend U.S.-built schools, use U.S. dollars and serve in the U.S. military at a higher rate than any U.S. state.

• But allegations earlier this year by then-President David Panuelo that the Chinese government was engaging in "political warfare" put the unlikeliest of countries in the international spotlight and posed deeper questions about the durability of U.S. power in the Pacific.

🇫🇲 Axios traveled to Micronesia and interviewed the country's four current and previous leaders — including President Wesley Simina, marking his first interview with an international reporter since taking office.

• They described how China has long been courting Micronesia's political elite — from providing small gifts like cellphones and envelopes of cash to constructing state government buildings and residences for the president and other top officials.

Beijing has built roads, schools and government offices.

• Go deeper.

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Xi warned Biden during summit that Beijing will reunify Taiwan with China

WASHINGTON — Chinese President Xi Jinping bluntly told President Joe Biden during their recent summit in San Francisco that Beijing will reunify Taiwan with mainland China but that the timing has not yet been decided, according to three current and former U.S. officials.

https://www.nbcnews.com/news/china/xi-warned-biden-summit-beijing-will-reunify-taiwan-china-rcna130087

U.S.-China Relations

The United States and China have one of the world’s most important and complex bilateral relationships. Since 1949, the countries have experienced periods of both tension and cooperation over issues including trade, climate change, and Taiwan.

https://www.cfr.org/timeline/us-china-relations

Why China-Taiwan Relations Are So Tense

Differences over Taiwan’s status have fueled rising tensions between the island and the mainland. Taiwan has the potential to be a flash point in U.S.-China relations.

https://www.cfr.org/backgrounder/china-taiwan-relations-tension-us-policy-biden

Taiwan’s Ability to Defend Against China Invasion Thrown Into Question

Cross-strait tensions are running high and January’s election might add to them. Yet officials say Taiwan’s military and civil defenses have a way to go if they’re to be able to deter an invading force.

https://www.bloomberg.com/news/features/2023-12-19/how-ready-is-taiwan-for-a-potential-war-with-china?

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U.S. and China military leaders speak for the first time in over a year

Gen. Charles "CQ" Brown, chair of the U.S. Joint Chiefs of Staff, spoke Thursday to his Chinese counterpart, per a statement.

https://www.axios.com/2023/12/21/us-china-military-leaders-speak-first-time-year?

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US companies are picky about investing in China. The exceptions? Burgers and lattes As a tumultuous 2023 for the Chinese economy ends, there has been at least one bright spot for Beijing when it comes to foreign investment: American fast-food chains have decided a market of 1.4 billion people is simply too delicious to pass up. Read more.

Why this matters: The investments in fast food and other consumer goods at a time when Washington is curbing exports of computer chips and other advanced technology don’t fit into what Chinese President Xi Jinping had in mind for modernizing China’s economy.   As tensions simmer between China and its Western trading partners, many multinational companies are shifting investments to other places, like Southeast Asia or India. That has sapped China of a key engine when its economy has yet to fully recover from the pandemic and a property industry crisis.   Burgers and lattes don’t create the sort of friction that more high-tech industries have in the complicated U.S.-China relationship. Those strains have persisted during Joe Biden’s presidency. But administration officials have said they don’t want to see a total decoupling of the world’s two biggest economies.

Related coverage ➤ China sanctions a US research firm and 2 individuals over reports on human rights abuses in Xinjiang US recommends Americans reconsider traveling to China due to arbitrary law enforcement and exit bans China's Alibaba must face a lawsuit by a US toymaker for allegedly selling fake Squishmallows

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China fires back at U.S. sanctions

Beijing is taking U.S. sanctions head-on with its latest round of restrictions targeting U.S.-based firms that gather open source data about business links to Xinjiang.

https://www.axios.com/2023/12/29/us-china-sanctions-xinjiang

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🧪 Next U.S.-China tech clash

Illustration: Natalie Peeples/Axios

Beijing's biotech ambitions are sounding alarms on Capitol Hill with new proposed legislation that could derail China's biggest biotech company's operations in the U.S., Axios managing editor Alison Snyder writes. Why it matters: The need to quash outbreaks, quickly create medicines and stress-proof crops is providing a lucrative arena for biotech companies to sell their services — and putting biology at the center of geopolitics. What's happening: The House Select Committee on China last week introduced a bill to ban groups that receive federal funds from buying equipment and services from "foreign adversary biotech companies," Axios' Peter Sullivan and Adriel Bettelheim report. A target of the new bill is Chinese genomic sequencing behemoth BGI Group, which appears on the U.S. Department of Defense blacklist of Chinese military-linked companies that operate in the U.S. The bill points to BGI's global genomic data collection efforts, its obligation under Chinese law to transfer data to the country's government if requested and its alleged links to the Chinese military as national security threats. Between the lines: BGI and its affiliates draw in clients from around the globe by offering an array of products and services, including DNA sequencing machines, diagnostic tests and data storage. That kind of one-stop shopping isn't available from Western companies. "The U.S. doesn't have anything akin to BGI," says Anna Puglisi, a senior fellow at Georgetown's Center for Security and Emerging Technology. Read on.

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Biden and Xi discuss Taiwan, AI and fentanyl in a push to return to regular leader talks

WASHINGTON (AP) — President Joe Biden and Chinese President Xi Jinping discussed Taiwan, artificial intelligence and security issues Tuesday in a call meant to demonstrate a return to regular leader-to-leader dialogue between the two powers.

https://apnews.com/article/biden-xi-china-yellen-ai-taiwan-fentanyl-c3317fae3e45b04cffcda5bb63adee56?

Biden, Xi speak for first time since November summit

President Biden and Chinese President Xi Jinping held a phone call Tuesday to discuss a variety of economic, military and political issues related to the U.S.-China bilateral relationship.

https://www.axios.com/2024/04/02/biden-xi-call-china-relations?

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Yellen calls for level playing field for US workers and firms during China visit

GUANGZHOU, China (AP) — U.S. Treasury Secretary Janet Yellen called on China on Friday to address manufacturing overcapacity that she said risks causing global economic dislocation, and to create a level playing field for American companies and workers.

https://apnews.com/article/yellen-china-trade-overcapacity-ev-solar-7f861ff193fdc35b355c650fb84d204c?

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Here’s what’s behind the latest US-China trade fight China’s burgeoning production of electric cars and other green technologies has become a flashpoint in a new U.S.-China trade fight, highlighted by Treasury Secretary Janet Yellen during her five-day visit to China. Read more.

Recent developments: China has sharply ramped up its production of cheap electric vehicles, solar panels, and batteries just as the Biden administration has pushed legislation supporting many of those industries in the United States.   Concerns are growing not just in the U.S. but also in Europe and Mexico that China will seek to bolster its own struggling economy with a wave of exports that could undercut factories overseas. The U.S. currently has a 25% tariff on cars from China that has largely blocked vehicles from that country.   For now, the U.S. and China have mainly agreed to hold talks on the issue. China hasn’t committed to any steps to address American concerns, arguing that its cheap green products are helping the world wage a costly battle against climate change.

RELATED COVERAGE ➤ Biden says US support for Philippines, Japan defense ‘ironclad’ amid growing China provocations   China says economy ‘stable,’ rejects Fitch Ratings downgrade of its fiscal outlook   From overcapacity to TikTok, the issues covered during Janet Yellen’s trip to China

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US-China talks start with warnings about misunderstandings and miscalculations

BEIJING (AP) — The United States and China butted heads over a number of contentious bilateral, regional and global issues as U.S. Secretary of State Antony Blinken met Friday with Chinese Foreign Minister Wang Yi.

https://www.newsbreak.com/news/3416261263203-us-china-talks-start-with-warnings-about-misunderstandings-and-miscalculations?

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Blinken's warnings to Xi

The Chinese government may be attempting to influence the U.S. election, Secretary of State Anthony Blinken said in a CNN interview today as he ended a three-day trip to China.

• "We have seen, generally speaking, evidence of attempts to influence and arguably interfere, and we want to make sure that that's cut off as quickly as possible," Blinken said.
• "Any interference by China in our election is something that we're looking very carefully at and is totally unacceptable to us, so I wanted to make sure that they heard that message again," Blinken said.

Blinken also raised concerns about the materials and other assistance China has been providing to the Russian military.

• "Russia would struggle to sustain its assault on Ukraine without China's support," Blinken said after a meeting with Chinese President Xi Jinping.

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Biden hikes tariffs on Chinese EVs, solar cells, steel, aluminum — and snipes at Trump

WASHINGTON (AP) — President Joe Biden slapped major new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment on Tuesday, taking potshots at Donald Trump along the way as he embraced a strategy that’s increasing friction between the world’s two largest economies.

https://apnews.com/article/biden-china-tariffs-electric-vehicles-evs-solar-2024ba735c47e04a50898a88425c5e2c?

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💰 Breaking: Biden's big China tariffs

Sarah Grillo/Axios. Photo: Drew Angerer/Getty Images

Announced at 5 a.m. ET: President Biden is moving against cheap Chinese imports of electric vehicles, batteries, solar equipment and other goods with aggressive new tariffs today, Axios' Hans Nichols writes. Why it matters: It's a long-term protectionist play to allow America's nascent green technology, infrastructure and manufacturing industries — which Biden is subsidizing with over $1 trillion in direct investments — to get up to scale. 🚘 Driving the news: Biden will announce the new tariffs on an additional $18 billion of Chinese imports in a Rose Garden ceremony at 12:15 p.m. ET. For EVs, the tariff rate will increase from 25% to 100% in 2024. For lithium-ion EV batteries: 7.5% to 25% in 2024. For semiconductors: 25% to 50% by 2025. 🔋 Between the lines: Quadrupling tariffs on Chinese EVs and tripling steel and aluminum duties allow Biden to flesh out his broader argument that his China approach is tougher and more targeted than Trump's. But there are clear risks attached to Biden's strategy. Five months ahead of the election, Biden could escalate a trade war with Beijing, hurting the U.S. economy. Biden is also engaging with Trump on an issue the former president relishes, and which has bolstered his popularity in rural America. Keep reading ... White House fact sheet.

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🚨 U.S. warns: China hacked spy road map

Illustration: Sarah Grillo/Axios

Chinese hackers have spent more than a year lurking inside the corners of America's telecommunication networks — and pulled a nearly complete list of phone numbers of individuals the Justice Department is monitoring for espionage. "[T]he penetration almost certainly gave China a road map to discover which of China's spies the United States has identified and which they have missed," The New York Times' national security team reports from Washington. 🔎 Zoom in: America's communications system is "built on a mishmash of aging systems, which made it far easier for the Chinese to break into upward of 10 telecommunication companies." The hack, which officials believe was orchestrated by a group closely linked to Chinese state security, could have covered calls, texts and emails. Targets included President-elect Trump, Vice President-elect JD Vance, and senior national security officials. 🔒 Officials emphasized that encrypted messages, such as those sent via WhatsApp, Signal or iMessage, were safe. The latest: Top leaders from telecommunication companies, including Verizon, AT&T and T-Mobile, met at the White House yesterday to discuss the problem. The message from top U.S. national security officials: Help us find a permanent way to keep Chinese spies out. More from The Times (gift link).

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US secures release of 3 Americans in prisoner swap with China

Three Americans who had been detained in China for years have been released in a prisoner swap between Washington and Beijing.

https://www.cnn.com/2024/11/27/politics/us-citizens-held-in-china-released/index.html?

China releases 3 Americans it imprisoned for years, and Beijing says US returned 4 people to China

WASHINGTON (AP) — Three American citizens imprisoned for years by China arrived back in the United States late Wednesday. Their release, announced earlier by the White House, was the result of a rare diplomatic agreement with Beijing in the final months of the Biden administration.

https://apnews.com/article/us-china-americans-detained-released-365258f044ec5a650aaeccf33d817d64?

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🇨🇳 U.S. says China hacked Treasury

Illustration: Sarah Grillo/Axios

Hackers connected to China's government breached several Treasury Department workstations and accessed unclassified documents, Axios cybersecurity reporter Sam Sabin writes from a Treasury letter to Congress. Why it matters: The U.S. government is already scrambling to respond to an ongoing China-backed hack of American telecom networks that targeted high-profile officials. Aditi Hardikar, Treasury's assistant secretary for management, wrote to the Senate Banking Committee that the department was notified of a "major" cyber incident on Dec. 8. The hackers, which Treasury has linked to an unspecified Chinese state-sponsored hacking group, gained access to Treasury's networks via software service provider BeyondTrust, according to the letter. 💻 How it worked: Chinese hackers stole a key that BeyondTrust uses to "secure a cloud-based service used to remotely provide technical support" for several Treasury Department users. The hackers leveraged that access to override BeyondTrust's security controls and access unclassified documents. A Treasury spokesperson said in a statement to Axios that the "compromised BeyondTrust service has been taken offline" and there is "no evidence indicating a threat actor has continued access to Treasury systems." The Chinese Embassy in Washington accused the U.S. of "smear attacks." Read the 1-page letter ...

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Biden's last swing at Chinese AI

Sarah Grillo/Axios. Photo: Drew Angerer/Getty Images

At 6 a.m. today, the Commerce Department issued AI export controls aimed at ensuring China does not gain access to U.S. tech through third countries, Axios' Maria Curi reports. Why it matters: The Export Control Framework for AI Diffusion is the Biden administration's final swing at China's AI industry. The new regulation is meant to keep AI from fueling Beijing's military development, administration officials say. What's inside: The rule will create a new global licensing system for the most advanced AI technology exports. Companies can continue to export to 20 allied nations freely. But they'll face some restrictions for non-allied countries and will be prohibited entirely from exporting to U.S. adversaries. 🏛️ Winners: China hawks on the Hill pushed the Biden administration to impose clear redlines in the name of national security and winning the tech race. 🖥️ Losers: NVIDIA, Oracle and industry groups say the "Byzantine, burdensome" rules will undermine American competitiveness and hinder innovation. Read Nvidia's statement. Keep reading ... White House fact sheet. 👀 What else we're watching: OpenAI today released a list of recommendations on AI competition and regulation — an "economic blueprint" the company is using to kick off a new era of tech policy, Axios' Scott Rosenberg reports. OpenAI's chief goals in the blueprint include: Promoting U.S.-made AI to make sure the new tech isn't "shaped by autocrats" and authoritarian governments, chiefly China. "Maximize the economic opportunity of AI for communities across the country" rather than just in coastal tech enclaves.