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US and China to Discuss Export Controls but Analysts Do Not Expect Breakthroughs

The United States and China have agreed to set up a platform to discuss export controls, a sticking point in their relationship amid ongoing tussles over trade and technology.

But the new channel of communication, announced after US Commerce Secretary Gina Raimondo’s meeting with her counterpart, Wang Wentao, in Beijing, is not expected to lead to policy breakthroughs given the political disagreements that still exist, said analysts.

After the Monday (Aug 28) talks – the first full day of meetings during Ms Raimondo’s four-day visit – the US Department of Commerce said it would launch the exchange to “serve as a platform to reduce misunderstanding of US national security policies”.

China’s Department of Commerce said the exchange was meant “to explain their respective export control systems and improve communication”, adding that both parties will provide related information “in accordance with their respective laws”.

The initiative’s first in-person meeting took place at the Ministry of Commerce in Beijing on Tuesday, with the US side led by Assistant Secretary for Export Enforcement Matthew Axelrod.

Besides the initiative, Raimondo and Wang also agreed to form a commercial issues working group which will allow government officials and private sector representatives from both sides to discuss trade and investment twice a year.

Her visit is the fourth by a top US administration official since June.

The two superpowers have been embroiled in a tit-for-tat trade dispute over the past year, with Washington ramping up restrictions on Chinese access to high-end computer chips on “national security” grounds.

China has strenuously opposed the US’ trade restrictions and have described them as efforts to contain its progress. US officials have stressed that they are not looking to decouple the world’s two largest economies but their assurance has been met with scepticism in Beijing.

Dr Stephen Olson, a senior research fellow at philanthropic trade organisation Hinrich Foundation, believes that while the latest bilateral initiatives demonstrate a desire for greater transparency and communication, significant disagreements still exist.

“Talking is better than not talking and transparency is better than misunderstanding,” he said. However, it would be a mistake to draw overly optimistic conclusions as the real problem is not a lack of understanding, he added.

“China has concluded that the US export and investment restrictions are intended to block China’s rise, and there is no information that the US could ‘share’ that would fundamentally alter China’s beliefs. This information exchange will not therefore produce any dramatic improvements,” noted Dr Olson.

Prominent political commentator Hu Xijin, former editor-in-chief of nationalistic tabloid Global Times, wrote on Weibo that while the new communication channel signals a desire to stabilise trade relations, there is more than meets the eye.

The US hopes that the working group would be used to coordinate the implementation of export controls, rather than change the controls themselves, he wrote on Tuesday.

“Many ordinary Chinese still harbour strong suspicions about the US’ sincerity, especially as Raimondo has repeatedly made clear that the US will not compromise or negotiate on issues of national security.”

Beijing was widely seen to have retaliated against US export controls on advanced semiconductors announced in October 2022 by banning Chinese firms from buying from US memory chip giant Micron Technology.

China has also restricted the export of gallium and germanium, metals widely used in semiconductor manufacturing.

On Monday, Wang’s ministry said he expressed during his meeting with Raimondo serious concerns about US Section 301 tariffs on China, semiconductor policies, two-way investment restrictions, discriminatory subsidies and sanctions on Chinese companies.

She told reporters she discussed concerns over China’s ban on purchases of Micron memory chips with her Chinese counterpart. Shares in Micron closed up 2.5 per cent and Intel rose 1.1 per cent after the news, Reuters reported.

Raimondo met Chinese Premier Li Qiang, Vice-Premier He Lifeng and Minister of Culture and Tourism Hu Heping on Tuesday. She is expected to end her trip on Wednesday with a visit to Shanghai.

Source : The Star