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Blacklists, Trade and More U.S.-China Flashpoints
An incumbent superpower and a rising one are finding coexistence increasingly difficult.
24 Dec 2021, 11:31 AM IST 
A demonstrator at a rally to petition the U.S. Congress to pass the “Hong Kong Human Rights and Democracy Act” in the Central district of Hong Kong, China, on Sept. 8, 2019. (Photographer: Kyle Lam/Bloomberg)
(Bloomberg) --
An incumbent superpower and a rising one are finding coexistence increasingly difficult. Jockeying for position in a changing world, the U.S. and China are facing off on economic, military and political issues. “The period that was broadly described as engagement has come to an end,” U.S. President Joe Biden’s top Asia adviser declared. Now, “the dominant paradigm is going to be competition.” Here’s a rundown of areas of contention, some with significant consequences and others mostly symbolic for now.
Blacklisting
| IMPACT: Significant |
| DISPUTE: The U.S. has accused China of using its access to U.S. capital and technology to beef up its military and security apparatus. Starting under President Donald Trump, and continuing under Biden, the U.S. has taken steps to bar American investments in firms owned or controlled by the Chinese military and to blacklist some Chinese companies to keep them away from U.S. markets and know-how. |
| CONSEQUENCES: The U.S. investment ban applies to dozens of Chinese companies including Huawei Technologies Co. and the country’s three biggest telecommunications companies. Chinese President Xi Jinping pushed through legislation aimed at giving the country more tools to hit back against sanctions and what it has called “long-arm jurisdiction.” |
Delisting
| IMPACT: Significant |
| DISPUTE: Chinese companies in need of capital have raised more than $100 billion in first-time share sales over the past two decades by listing on U.S. stock exchanges. Now both countries are rethinking the arrangement. |
| CONSEQUENCES: Congress has moved to force U.S.-listed Chinese companies to let U.S. regulators examine their audits, as other public companies must. The U.S. Securities and Exchange Commission has begun implementing the legislation passed in December 2020 to delist major Chinese companies that refuse, although it would probably take years to have an impact. China has pledged to write new rules for companies going public outside the mainland and to step up oversight of those already trading offshore. In December, ride-hailing giant Didi Global Inc. said it would delist from the New York Stock Exchange, barely five months after its initial public offering drew the wrath of Beijing, and list in Hong Kong instead. |
Tariffs and Trade
| IMPACT: Significant |
| DISPUTE: What started in 2018 with U.S. tariffs on imported washing machines and solar panels escalated into a trade war that’s still affecting trade flows. U.S. leaders accuse China of unfair trading practices including subsidizing domestic companies and appropriating intellectual property. China insists it plays by global trade rules and says the U.S. is trying to curb its development. |
| CONSEQUENCES: Punitive tariffs imposed by both sides are still in place, making hundreds of billions of dollars’ worth of goods more expensive. China has been working on reforms promised in an interim deal, such as how it handles intellectual property, but it’s far behind on purchase targets for U.S. goods, partly because the Covid-19 outbreak disrupted trade. Biden’s U.S. trade representative, Katherine Tai, has pledged to build on the existing trade deal and said that tariff removal will depend on future discussions. In August, U.S. business groups called for the tariffs to be removed and talks with China to restart. |
Uyghurs/Xinjiang
| IMPACT: Potentially significant |
| DISPUTE: China says it’s fighting separatism and religious extremism among the Uyghurs, a predominately Muslim ethnic group based in the far-western region of Xinjiang. United Nations experts have said as many as a million Uyghurs have been interned in recent years in camps the Chinese government calls “voluntary education centers.” The U.S. has accused China of committing genocide. |
| CONSEQUENCES: Biden has signed legislation that bans goods from China’s Xinjiang region from coming to the U.S. unless companies can prove that they’ve not been made with forced labor. He also has barred some solar energy products made in the region, citing allegations of forced labor, and expanded a blacklist started under Trump of Chinese technology companies, including video-surveillance firms, said to be implicated in human rights abuses in Xinjiang. The U.S. has also placed financial sanctions on Chinese government officials linked to the region, including a top member of the Communist Party. China retaliated with sanctions against U.S. officials including Senators Marco Rubio and Ted Cruz, as well as American activists and European and Canadian politicians. |
Olympics
| IMPACT: Symbolic |
| DISPUTE: Some U.S. lawmakers want to use the 2022 Winter Olympics in Beijing as an opportunity to highlight China’s alleged human-rights abuses. China has said that some politicians in the U.S. are trying to “smear China and sabotage the preparations.” |
| CONSEQUENCES: Biden declared a diplomatic boycott of the Winter Games, meaning U.S. officials won’t attend but athletes are free to go. Japan, Australia, Canada and the U.K. are among those taking similar action. |
Coronavirus Origins
| IMPACT: Symbolic |
| DISPUTE: Some scientists and politicians have suggested that the virus could have leaked from a high-security lab in China that’s a global hub for coronavirus research. Chinese officials have repeatedly denied that the facility was the source of the pathogen and accused the U.S. of “stigmatization, political manipulation and blame-shifting.” The White House criticized a World Health Organization report on the origins of the coronavirus, calling it incomplete and faulting data and access provided by China to the authors. |
| CONSEQUENCES: Biden rebuked China for stonewalling a U.S. investigation into the origins of the virus. His administration reported it was unable to reach firm conclusions because of Beijing’s unwillingness to cooperate, an accusation condemned by China. He also was said to be seeking a new, WHO-convened study “free from interference.” |
Hong Kong
| IMPACT: Significant |
| DISPUTE: China promised to preserve a “high degree of autonomy” in Hong Kong after its return from the U.K. in 1997. The U.S., in return, granted a special trading status that helped Hong Kong to prosper as an international financial center. In 2020, after the Chinese government imposed a tough new national security law on the city, Trump declared the special status revoked. After Beijing approved an overhaul of Hong Kong’s electoral system to ensure that only “patriots” can serve, the U.S. called it an “assault on democracy.” |
| CONSEQUENCES: The Biden administration renewed the finding that Hong Kong should no longer receive preferential treatment and warned U.S. companies and investors about the risks of doing business there. Biden said in August that visitors from Hong Kong could remain in the U.S. for as long as 18 months, as a temporary “safe haven.” The U.S. sanctioned more than 40 Chinese officials and their allies in Hong Kong, including the city’s leader, Carrie Lam, who said she lost access to basic banking services. Global financial institutions were put on notice that they risk running afoul of American sanctions if they do business with sanctioned individuals. China has hit back with sanctions and travel restrictions on U.S. officials, politicians and diplomats. |
Spying
| IMPACT: Significant |
| DISPUTE: The U.S. has accused China of increasing the scale of spying and influence operations -- including the hacking of Microsoft Corp.’s Exchange email servers in 2021 -- and of using scholars in the U.S. to gain access to cutting-edge technology and research. The Federal Bureau of Investigation and Department of Homeland Security warned in 2020 that hackers working for the Chinese government were trying to steal research on coronavirus vaccines and treatments. China has called such charges slanderous and has long insisted that it’s a victim, not a perpetrator, of cyberattacks. |
| CONSEQUENCES: Four Chinese hackers who allegedly targeted Ebola vaccine research were indicted by the U.S. in July. The State Department ordered the Chinese consulate in Houston to close in 2020 after two Chinese citizens were convicted in America’s energy capital of trying to steal trade secrets. China then forced the U.S. to close its mission in the southwestern city of Chengdu. The U.S. imposed new restrictions on Chinese diplomats in the country, and China responded in kind. Biden has kept Trump’s proclamation barring visas for thousands of post-graduate students and researchers deemed to have ties with China’s military schools. |
Huawei
| IMPACT: Significant |
| DISPUTE: The U.S. Federal Communications Commission says that telecommunications and video-surveillance equipment made by Huawei and four other Chinese companies poses “an unacceptable risk to the national security” and shouldn’t be used. The companies deny the charges, and China says the U.S. is trying to suppress its technological advance. |
| CONSEQUENCES: The Biden administration has maintained Trump’s designation of Huawei and ZTE Corp. as national security threats, saying use of their gear would make communication networks vulnerable to spying. (ZTE was already a shadow of its former self, in part due to previous U.S. pressure.) The U.S. has made headway in pressing allies to steer clear of Huawei equipment for fifth-generation (5G) mobile networks. It also moved to deny Huawei access to U.S. technology, making it difficult for the company to design and produce its own chips. |
Taiwan
| IMPACT: Potentially significant |
| DISPUTE: A 1979 law commits the U.S. to help Taiwan defend itself against attack, despite Washington’s decision to switch recognition to Beijing from the Republic of China government in Taipei. China claims the democratically run island as its territory, even though the People’s Republic has never controlled Taiwan. |
| CONSEQUENCES: A U.S.-China clash over Taiwan has re-emerged as one of the world’s biggest geopolitical risks. The U.S. State Department has called its support for Taiwan “rock-solid” while reaffirming its “One China” policy, under which Washington recognizes the People’s Republic as the “sole legal government of China,” without clarifying its position on Taiwan’s sovereignty. The Chinese government has increased its military activities near Taiwan, highlighting the island’s vulnerability while probing its defenses and testing the limits of the American commitment. The U.S. has stepped up surveillance flights in the region and renewed calls for China to open a hotline to help keep any military misunderstandings from escalating. In August, the Biden administration approved its first arms sale to Taiwan, a potential $750 million deal. Chinese Foreign Minister Wang Yi has warned the U.S. to stop “crossing lines and playing with fire.” |
South China Sea
| IMPACT: Potentially significant |
| DISPUTE: China’s expansive territorial claims in the resource-rich South China Sea put it at odds with Southeast Asian neighbors including Vietnam, the Philippines and Malaysia. The U.S. has sent warships and aircraft near disputed areas for decades to assert the freedom to navigate through what it considers international waters and airspace. More than $3 trillion worth of trade is estimated to transit through the region annually. |
| CONSEQUENCES: The U.S. has criticized China for expanding its military presence and called open and safe sea lanes a vital interest to America’s foreign policy. After the U.S. rejected Chinese territorial claims beyond its maritime zone, China sent more than 200 fishing boats to an area that’s also claimed by the Philippines. The Philippines has repeatedly protested their presence, backed by the U.S., while Beijing has said its actions were normal and legitimate. The Chinese aircraft carrier Shandong conducted training in the South China Sea in May. U.S. Secretary of Defense Lloyd J. Austin proposed deepening cooperation with regional partners “to deter coercion and aggression.” |
Media
| IMPACT: Significant |
| DISPUTE: Both the U.S. and China have imposed restrictions on the other nation’s media, expelling or forcing journalists to leave and providing short-term visas. |
| CONSEQUENCES: The Trump administration designated some Chinese media outlets as foreign missions in early 2020. Shortly after, China revoked the press credentials of three Wall Street Journal reporters after the paper refused to apologize for an op-ed. The U.S. then cut the number of staff working at four Chinese state-owned news outlets to 100 from 160. China followed by expelling American reporters from the New York Times, Wall Street Journal and Washington Post and asked some U.S. media outlets to submit detailed information on personnel and assets. In November, the two sides agreed to allow some of each other’s journalists to enter, in a sign of easing. |
TikTok and WeChat
| IMPACT: Potentially significant |
| DISPUTE: The video-sharing app TikTok, owned by the Chinese company ByteDance Ltd., is hugely popular in the U.S., especially among teens. WeChat, owned by Tencent Holdings Ltd., is widely used by Chinese and U.S. companies to conduct business. U.S. officials say there’s a potential security threat if the apps are used for propaganda or if the Chinese government uses collected data to create profiles of Americans. |
| CONSEQUENCES: In 2020, Trump sought to ban U.S. residents from doing business with TikTok or WeChat, but those orders were blocked by federal judges who said the administration hadn’t shown those apps in particular posed a national security threat justifying a ban. Biden revoked the bans in June, instead directing the Commerce Department to review and take action against software applications that pose a risk to Americans’ sensitive data. |
Tibet
| IMPACT: Symbolic |
| DISPUTE: In 1959, the People’s Liberation Army quashed a revolt in this mountainous region on China’s border with India and Nepal, and the Dalai Lama, the Tibetan spiritual leader, fled into exile. Tibet’s status as an autonomous region of China has long been an irritant in U.S.-China relations. |
| CONSEQUENCES: The Biden administration promised to continue supporting human rights and “meaningful autonomy” for Tibet. Biden also has vowed to meet the Dalai Lama. Trump had imposed travel restrictions on unspecified Chinese government and party officials determined to be “substantially involved” in restricting access to the region by U.S diplomats and others. In response, China said it would restrict visas for U.S. personnel over their “egregious behavior” on Tibet. |
The Reference Shelf
- More QuickTakes on whether the U.S. and China are really decoupling, the China model of governance, the different U.S. blacklists, and tensions between China and Australia, and why Taiwan has become the biggest risk for U.S.-China clash.
- A Harvard Business Review article says be prepared for more.
- The 2020 annual report from the U.S.-China Economic and Security Review Commission.
- Bloomberg Opinion’s Hal Brands on staking America’s claim in the Pacific, and Niall Ferguson on how Biden and Xi can cool tensions.
©2021 Bloomberg L.P.
With assistance from Bloomberg