The downward slide in US-China relations continued as the two countries wrangled over Hong Kong, COVID-19, Taiwan, the South China Sea, Xinjiang, and cyberattacks. US Deputy Secretary of State Wendy Sherman and Chinese officials met in Tianjin but appeared to make no progress toward managing intensifying competition between the two countries. The US rolled out a series of measures against alleged Chinese forced labor practices and strengthened the prohibition against US investments in the PRC’s military industrial complex. Deteriorating freedoms in Hong Kong prompted the Biden administration to impose more sanctions on Chinese officials and issue a business advisory warning US companies of growing risks to their activities in Hong Kong.

Beijing retaliated by imposing sanctions on US citizens under its new Anti-Foreign Sanctions Law. In close coordination with its European allies, the US condemned the PRC’s use of criminal contract hackers to conduct unsanctioned cyber operations around the world, including attacks on Microsoft’s Exchange Server in March 2021. Chinese and US officials in charge of trade and economic relations held virtual meetings, but tariffs imposed by both sides during the Trump administration remained in place. Biden officials maintained that they are conducting “a robust, strategic review” of the US economic relationship with China. As the Taliban assumed control in Afghanistan, US and Chinese officials exchanged views, but the prospects for coordination and cooperation appeared dim.

Deputy Secretary of State Wendy Sherman visits Tianjin

In late July, Deputy Secretary of State Wendy Sherman traveled to Tianjin for the highest-level meeting between US and Chinese officials since consultations in Anchorage last March between Secretary of State Antony Blinken and National Security Advisor Jake Sullivan and their Chinese counterparts, Director of the CCP Central Foreign Affairs Commission Office Yang Jiechi and State Councilor Wang Yi. The visit was first reported by the South China Morning Post, which claimed that Sherman and Vice Foreign Minister Xie Feng would discuss the possibility of a meeting between US Secretary of State Antony Blinken and Chinese Foreign Minister Wang Yi that would in turn prepare for an in-person conversation between US President Joe Biden and Chinese leader Xi Jinping on the margins of the G20 in October.

Figure 1 Wang Yi Meets with U.S. Deputy Secretary of State Wendy Sherman in Tianjin in July 2021. Photo: PRC MOFA

At a State Department briefing ahead of the trip, the US set low expectations, saying that the purpose of Sherman’s visit was not to negotiate specifics, but rather was to “have frank and honest exchanges about the relationship.” Officials previewed Sherman’s message that the US does not want “stiff and sustained competition to veer into conflict” and said that their goal is to put in place “guard rails and parameters” to “responsibly manage the relationship.” In comments to the Chinese media before Sherman’s arrival, Wang Yi warned that he would give the US “a good tutorial” if it “has not learned how to get along with other countries on an equal footing.”

US officials insisted that both sides agreed in advance of the visit that the engagement would be “substantive and constructive,” but the readouts from both capitals suggest that little was achieved other than an exchange of recriminations. Taking a page from prior US interactions with China, Beijing even presented Sherman with two lists. One list enumerated 16 steps that Washington must take to undo damage inflicted on China, including visa restrictions on Chinese Communist Party members, suppression of Chinese companies like Huawei, and designation of Chinese media outlets as foreign agents. The second list cited 10 areas of Chinese concern about US behavior, including insisting that China is the source of the coronavirus, challenging Chinese sovereignty over Taiwan, Hong Kong, and Xinjiang, and inciting anti-Chinese sentiment in America.

Wang Yi put forward three explicit demands: the US must not 1) challenge, slander or even attempt to subvert the path and system of socialism with Chinese characteristics; 2) attempt to obstruct or even interrupt China’s development process; or 3) infringe upon China’s state sovereignty, or even damage China’s territorial integrity. Sherman laid out a litany of US concerns, including Chinese policies in Hong Kong, Tibet, and Xinjiang, cyberattacks, pressure on Taiwan, coercion in the South and East China Seas, unwillingness to cooperate with the World Health Organization on a second phase investigation of the origins of COVID-19, and lack of foreign media access in China.

The two sides also discussed issues where they have potentially overlapping interests, including climate change, counternarcotics, nonproliferation, and regional concerns such as Afghanistan, North Korea, Myanmar, and Iran. But Xie Feng suggested that Chinese cooperation is conditional, saying, “It’s not going to work if the US asks for cooperation on the one hand and damages China’s interests on the other.” In rebuttal, the US said that China should not take a transactional approach to areas of global concern.

The only area of agreement between the US and China appeared to be that communication channels should remain open. It was unclear, however, whether US and Chinese top leaders would meet anytime soon. Deputy Secretary Sherman revealed that a possible meeting between Biden and Xi was not raised in Tianjin.

In mid-August, China’s newly arrived ambassador to the United States Qin Gang met with Sherman. According to the Chinese embassy readout of the meeting, Qin told her that US-China ties are at a “new crossroads.” He pledged to work to promote a “rational, stable, manageable, and constructive China-US relationship.”

Human Rights and Xinjiang are High on the US Agenda

During the presidential campaign, Biden pledged to adopt a tougher and more consistent stance on human rights violations than the Trump administration. Several actions were taken in the May to August period to deliver on that promise. On May 12, the Department of State issued its 2020 Annual Report of International Religious Freedom as mandated by Congress. At the same time, it imposed sanctions on Yu Hui, former Director of the “Central Leading Group on Preventing and Dealing with Heretical Religions,” for his involvement in human rights violations, notably the arbitrary detention of Falun Gong practitioners. Yu Hui and his immediate family members were barred from entering the United States.

Two weeks later, China retaliated, declaring that the head of the United States Commission on International Religious Freedom, Johnnie Moore, and his family, would henceforth not be permitted to enter the Chinese mainland, Hong Kong, or Macao. Ministry of Foreign Affairs spokesman Zhao Lijian said China’s action was justified because “the United States openly endorsed cult organizations and imposed unilateral sanctions against Chinese personnel based on lies and false information.”

Beijing’s tit-for-tat measure did not deter the Biden administration from taking additional steps to punish China for human rights infringements. On June 3, the same day that Secretary of State Blinken released a statement marking the 32^ndanniversary of the Tiananmen Square massacre, Biden signed an executive order that expanded the scope of the national emergency declared by President Trump with respect to the military-industrial complex of the PRC. The EO specifies that the use of Chinese surveillance technology outside PRC borders, and the development or use of Chinese surveillance technology to enable repression or serious human rights abuses, constitutes “unusual and extraordinary threats.” The action strengthens the prohibition against US investments in the PRC’s military-industrial complex and ensures that US investments don’t undermine the security or values of the US and its allies. Biden added 59 entities to the Department of the Treasury’s Office of Foreign Assets Control’s list of Chinese military-industrial complex companies.

The US also rolled out a series of measures against alleged Chinese forced labor practices. At the end of May, the US Customs and Border Protection (CBP) under the Homeland Security Department issued a Withhold Release Order against Dalian Ocean Fishing Company, which would stop tuna, swordfish, and other seafood harvested by vessels owned or operated by that company from entering the United States.

Almost a month later, on June 24, the CBP issued another Withhold Release Order against Hoshine Silicon Industry company, which is located in China’s Xinjiang Uyghur Autonomous Region. The measure imposed penalties on Hoshine and its subsidiaries, barring imports of all shipments of silica-based products made by those companies from entering the US. Metallurgical-grade silicon is widely used to make solar panels and Hoshine is China’s top producer. At the same time, the Department of Labor’s Bureau of International Labor Affairs published a Federal Register Notice updating its “List of Goods Produced by Child Labor or Forced Labor” to include polysilicon produced in China. In a third action, the Department of Commerce added five Chinese entities to its Entity List for using forced labor against Muslims in Xinjiang.

The spate of sanctions came after President Biden returned from meetings in Europe with leaders of the countries that comprise the Group of Seven, whom he urged to collectively reprimand Chinese forced labor practices and other human rights abuses. In a sign of possible concern that US companies were not taking the new measures seriously, in mid-July several US agencies issued a business advisory to companies doing business with Xinjiang, warning of forced-labor risks in supply chains linked to the region. Secretary Blinken said the advisory was issued in response to China’s “ongoing genocide and crimes against humanity in Xinjiang and the growing evidence of its use of forced labor there.” The European Union also issued business guidance for its companies on how to identify, prevent, mitigate, and address forced labor in global supply chains, although the guidance was not specifically focused on China or Xinjiang.

In a display of support for the plight of the Uyghurs, Blinken met with seven Uyghur internment camp survivors, advocates and relatives of individuals on July 6. Three days later, the Commerce Department added 14 Chinese entities to its Entity List over alleged human rights abuses and high-tech surveillance in Xinjiang.

Deteriorating Freedoms in Hong Kong Lead to Tit-for-Tat Sanctions

When Hong Kong’s pro-democracy newspaper Apple Daily shut down in late June due to growing Chinese pressure, President Biden issued a strong statement calling on Beijing to stop targeting the independent media and release journalists and media executives who have been detained. “The United States will not waver in our support of people in Hong Kong and all those who stand up for the basic freedoms all people deserve,” he added.

Figure 2 A supporter of two arrested executives of Hong Kong’s pro-democracy Apple Daily newspaper holds up a copy of the paper during a protest outside a court in Hong Kong, June 19, 2021. Photo: AFP via Radio Free Asia

In a statement marking the one-year anniversary of China’s imposition of the National Security Law on Hong Kong, Secretary Blinken condemned the actions taken to undermine Hong Kong’s democracy. Blinken expressed US commitment to supporting the rights and freedoms of the people of Hong Kong. On the same day, the US took two additional actions: the US Treasury Department added seven people from China’s Hong Kong Liaison office to its “specially designated nationals list,” and the Departments of State, Treasury, Commerce, and Homeland Security issued a business advisory to warn US businesses of risks to their activities in Hong Kong and encourage due diligence to mitigate such risks.

Beijing lost no time retaliating. Using the PRC’s Anti-Foreign Sanctions Law, which was passed by the Standing Committee of China’s National People’s Congress on June 10, China imposed sanctions on seven US individuals and one entity, including former Secretary of Commerce Wilbur Ross, Chairman of US-China Economic and Security Review Commission (USCC) Carolyn Bartholomew, former Staff Director of Congressional-Executive Commission on China (CECC) Jonathan Stivers, DoYun Kim at the National Democratic Institute for International Affairs, senior program manager of the International Republican Institute (IRI) Adam Joseph King, China Director at Human Rights Watch Sophie Richardson, and the Hong Kong Democratic Council.

China’s foreign ministry spokesperson warned external forces against interference in Hong Kong’s affairs, saying that doing so “would be as futile as an ant trying to shake a big tree.”

Chinese Cyber Intrusions Spur Counteractions

The Biden administration coordinated closely with several allies to condemn the PRC’s use of criminal contract hackers to conduct unsanctioned cyber operations around the world, including attacks on Microsoft’s Exchange Server in March 2021. On July 19, Secretary of State Blinken released a statement denouncing China’s alleged disruptive and destabilizing behavior in cyberspace and its threat to US economic and national security. A statement issued concomitantly by the White House condemned the PRC’s “pattern of irresponsible behavior in cyberspace,” saying it was “inconsistent with its stated objective of being seen as a responsible leader in the world.”

The US maintained that it had a high degree of confidence that China’s cyber actors who exploited the zero-day vulnerabilities in Microsoft’s Exchange Server were affiliated with China’s Ministry of State Security (MSS). The EU, UK, and NATO also condemned China’s malicious cyber activity, though their statements stopped short of blaming the PRC government and left open the possibility that the hackers were acting on their own.

In an effort to impose costs on China, the US unsealed an indictment charging four PRC nationals and residents with engaging in a campaign to hack into the computer systems of companies, universities, and government entities in the United States and abroad between 2011 and 2018. The defendants were alleged to have worked for the Hainan State Security Department, a provincial arm of the MSS. Deputy Attorney General Lisa O. Monaco said that “the breadth and duration of China’s hacking campaigns, including these efforts targeting a dozen countries across sectors ranging from healthcare and biomedical research to aviation and defense, remind us that no country or industry is safe.”

In a separate, but not entirely unrelated development, the US Joint Cybersecurity Advisory, the Cybersecurity and Infrastructure Security Agency (CISA), and the Federal Bureau of Investigation (FBI) released a Joint Cybersecurity Advisory attributing phishing and intrusion campaign activities targeting 23 US natural gas pipeline operators from 2011 to 2013 to Chinese state-sponsored actors. CISA and the FBI concluded that the activities were “intended to help China develop cyberattack capabilities against US pipelines to physically damage pipelines or disrupt pipeline operations.”

South China Sea Tensions Simmer

China’s Defense Minister Wei Fenghe confirmed that the South China Sea is considered a Chinese core interest at the ASEAN Defense Ministers (ADMM) Plus meeting in mid-June. A statement issued by Beijing quoted Wei as telling attendees that “On issues related to Taiwan, Xinjiang, Hong Kong, and the South China Sea, China is determined to safeguard the country’s core interests.”

Marking the fifth anniversary of the Arbitral Tribunal ruling on the Philippines case against China in the South China Sea on July 12, the State Department issued a strong statement underscoring the importance of freedom of the seas to all nations. The statement, released by Secretary Blinken, maintained that the rules-based maritime order is under threat in the South China Sea, and called out China for coercing and intimidating Southeast Asian coastal states and threatening freedom of navigation. It also reaffirmed US support for the ruling’s “unanimous and enduring decision firmly rejecting the PRC’s expansive South China Sea maritime claims as having no basis in international law.” Similar statements reiterating support for the 2016 arbitral tribunal ruling were issued by Australia, Canada, and the European Union.

Delivering the 40^th Fullerton Lecture in Singapore at the end of July, Secretary of Defense Lloyd Austin focused his remarks on the immediate challenges of combatting the Covid-19 pandemic and economic recovery. He called on the region to join the US to “build back better” and forge a “more resilient regional order.” In brief remarks on the South China Sea, Austin’s message differed from that of his predecessors. There was no mention of “freedom of navigation” and no reiteration of the mantra of the Obama and Trump administrations that the US military will “fly, sail and navigate wherever international law allows.” Instead, Austin stressed US support for the region’s coastal states in upholding their rights under international law. In an effort to reassure Southeast Asian states that US-China competition will not lead to conflict, Austin maintained that he is committed to pursuing a “constructive, stable relationship with China” including stronger crisis communication with the People’s Liberation Army and working with Beijing on common challenges.

The following month, the US and China had a testy exchange over the South China Sea in the UN Security Council. Secretary Blinken broached the issue, warning of the grave consequences that a conflict in the South China Sea, or in any body of water, would have for security and commerce. “When a state faces no consequences for ignoring these rules,” Blinken stated, it fuels greater impunity and instability everywhere. China’s Deputy UN Ambassador Dai Bing issued a sharp retort, claiming that the United States has become “the biggest threat to peace and stability in the South China Sea.”

The US Navy’s freedom of navigation operations (FONOPs) in the South China Sea continued in the months between May and August. On May 20, the guided-missile destroyer USS Curtis Wilbur sailed near the Paracel Islands, prompting the usual PRC objection and condemnation. In an unusual response to China’s typical claim that the PLA “expelled” US Navy ships from the area, the US 7^th Fleet maintained that the claim was “false,” noting that the PLA’s statement was intended to misrepresent lawful US maritime operations and assert its own illegitimate maritime claims at the expense of the Southeast Asian countries. The USS Benfold conducted a similar FONOP in the vicinity of the Paracel Islands on July 12.

Figure 3 The Arleigh Burke-class guided-missile destroyer USS Benfold (DDG 65) transits the Taiwan Strait while conducting routine underway operations. Photo: US Navy

Another Taiwan Arms Sale and Three Strait Transits

In early August, the US approved the sale to Taiwan of 40 M-109A6 Paladin 155mm self-propelled howitzers with associated equipment and logistics support. The package also included precision-guidance kits for artillery shells. The estimated cost of the potential sale is $750 million. Beijing criticized the decision and demanded that the US cease both its arms sales and military interaction with Taiwan, “lest more damage be dealt to China-US relations and peace and stability across the Taiwan Strait.”

US Navy warships sailed through the Taiwan Strait on June 22, July 28, and Aug. 27, bringing the total US transits this year to eight so far. In the August transit, the US guided-missile destroyer USS Kidd was accompanied by Coast Guard National Security Cutter USCG Munro. The 7^th Fleet announced the transits, stating that the operation “demonstrates the US commitment to a free and open Indo-Pacific.”

In the Tianjin meeting, Wang Yi raised Chinese concerns about US policy toward Taiwan. According to Xinhua, Wang urged the Biden administration to honor US commitments on the Taiwan question and to “act prudently.” Wang also asserted that China has the right to take any necessary measure to stop Taiwan independence.

US Trade Policy Remains Unclear

Unlike the Trump administration, the Biden team has not signaled that trade will be a priority in the US-China bilateral relationship. US Trade Representative Katherine Tai had her first meeting with Chinese Vice Premier Liu He via videoconference on May 26. Under the Phase One trade deal, officials from the two countries are expected to meet every six months, and the last meeting was in August 2020. The one-paragraph summary of the Tai-Liu conversation on the USTR website provided few details, saying only that Tai “discussed the guiding principles of the Biden-Harris Administration’s worker-centered trade policy and her ongoing review of the US-China trade relationship, while also raising issues of concern.” Xinhua described the conversation as “candid, practical and constructive” and held “in the spirit of equality and mutual respect.” Less than a week later, US Treasury Secretary Janet Yellen also held a virtual meeting with Liu He. The US and Chinese readouts of that meeting were also brief and devoid of details.

A separate set of talks took place in early June between the Secretary of Commerce Gina Raimondo and her Chinese counterpart Wang Wentao. According to the US side, Raimondo conveyed US concerns about China’s “unfair and market-distorting industrial policies” and the “need to level the playing field for American companies operating in China.

Although it isn’t known if tariffs were discussed in the virtual meeting between USTR Tai and Liu He, The Wall Street Journal reported that Chinese officials called on the US to roll back tariffs on Chinese products in a call that took place on the eve of the virtual meeting between their bosses. The first public comment by a Biden administration official on the tariffs came from Treasury Secretary Yellen in early July. In an interview with The New York Times, Yellen bluntly described tariffs as taxes on consumers, and said that her personal view was that “tariffs were not put in place on China in a way that was very thoughtful.” She added that the Trump administration had failed to address the fundamental problems that the US has with China.

Domestic pressure on the Biden administration to cut tariffs on Chinese products and resume trade negotiations with China came from nearly three dozen influential US business groups in early August. In a letter to USTR Tai and Treasury Secretary Yellen, the business groups maintained that Beijing had met “important benchmarks and commitments” in the Phase One trade deal and that the Trump-imposed tariffs harm US interests. The Biden administration would not be rushed, however. On Aug. 6, The New York Times quoted a USTR spokesman saying the administration was “conducting a robust, strategic review of our economic relationship with China to create effective policy.” That same day, White House Press Secretary Jen Psaki told the press that a review of China policy, including tariffs, was not yet finished. Nevertheless, there were rumors that Yellen might visit China later in the year.

Supply Chains and Tech

In June, the Biden administration completed a 100-day review of supply-chains that identified areas where China’s dominance threaten US security. Vulnerabilities included metals that are crucial for high-capacity batteries and some pharmaceuticals. The key findings included a recommendation that supply chain resilience be incorporated into US trade policy toward China and called for the US to work with other countries to reduce exposure and risk to the Chinese market.

That same month, President Biden issued an executive order revoking the Tiktok/WeChat restrictions imposed by the Trump administration which would have forced Google and Apple to remove the apps from their stores. But the legal case was apparently weak, and Tiktok and WeChat won preliminary injunctions staying the Commerce Department orders in September 2020. At the same time, Biden issued another executive order that replaced the Trump-era sanctions on Chinese military-related investment. The new sanctions authority expands targets from military-connected firms to the surveillance technology sector. Both of these executive orders were aimed at strengthening the legal basis of the Trump administration’s policies. They signal that the Biden administration remains concerned about the risks of continued financial and technology flows to the Chinese military-industrial complex and the dangers of Chinese technology companies gathering data on US citizens.

Afghanistan Falls to the Taliban

As the security situation in Afghanistan deteriorated rapidly following President Biden’s announcement on July 8 that the US would complete the withdrawal of its troops from Afghanistan by Aug. 31, Beijing voiced concern. China’s Foreign Ministry spokesman Zhao Lijian called for the US to “act in a responsible manner to ensure smooth transition in Afghanistan, prevent a resurgence of terrorist forces, and facilitate the peace and reconciliation process.”

Figure 4 Foreign Ministry Spokesperson Zhao Lijian’s Regular Press Conference on July 21, 2021. Photo: PRC MOFA

The collapse of the Afghan government and the Taliban’s takeover of Kabul affected both US and Chinese interests, prompting Secretary of State Blinken to place a call to his counterpart Wang Yi on Aug. 16. Blinken urged Beijing to use its influence with the Taliban to persuade it to make “a clean break with extremism,” conduct an orderly transfer of power, and establish an inclusive government. In response, Wang maintained that the US should seriously reflect and draw lessons from its policies in Afghanistan, noting that “the use of power and military means to solve problems will only cause more problems.” He indicated that China “stands ready to communicate with the United States to push for a soft landing of the Afghan issue” to prevent a new civil war or humanitarian disaster and avoid the country relapsing into a haven for terrorists. At the same time, however, Wang reiterated Xie Feng’s prior admonition, insisting that “the US side cannot, on the one hand, deliberately contain and suppress China and undermine China’s legitimate rights and interests, and on the other hand, expect support and cooperation from China, because such logic never exists in international exchanges.” Importantly, Blinken reaffirmed US opposition to “all forms of terrorism” and pledged that the US will not seek to foment unrest in China’s western border areas.

In another phone call between the two diplomats on Aug. 29, Wang voiced concern about the potential resurgence of terrorist groups inside Afghanistan and called for all parties to “contact and proactively guide the Taliban.” Wang also repeated that coordination between China and the US would depend on Washington’s policies toward Beijing in other areas, including the issue of the origins of COVID-19. It remained unclear whether the US and China would cooperate in pursuit of their overlapping goals on Afghanistan or other issues.

Tough Road Ahead

US-China relations will likely remain fraught for an extended period. Strategic competition is the dominant feature in the relationship; the question is whether Beijing and Washington can find a path to manage that competition and achieve peaceful coexistence. That objective, if attainable at all, can probably only be attained through a meeting between US and Chinese leaders. The earliest opportunity for a meeting between President Biden and Chinese leader Xi Jinping is the planned G20 Summit in Rome on Oct. 30-31. If both Biden and Xi attend in person, they could meet on the sidelines. Reports suggest, however, that Xi will attend via a video link instead. The next chance for a Biden-Xi meeting will be the COP 26 UN Climate Change Conference, hosted by the UK in partnership with Italy, which will take place in November. If Xi doesn’t attend the G20, however, it’s a good bet that he won’t attend COP 26.

Among the many challenges to a more stable US-China relationship is the domestic political calendar in Washington and Beijing. In the runup to midterm elections in the United States in November 2022, President Biden will remain wary of giving the Republicans fodder for their efforts to paint him as soft on China. Around the same time, China will hold its 20^th Party Congress, where Xi will seek an unprecedented third term as Communist Party general secretary. He too has an incentive to sustain a tough posture, defend Chinese sovereignty and other “core interests,” and avoid being seen as making unnecessary concessions to a United States weakened by the COVID-19 pandemic and its debacle in Afghanistan.

Chronology by former GMF Program Assistant Taili Ni and former GMF Research Intern Daniel Fu.