Analysis: China’s shadow looms over the US this week


And that was before Thursday’s seemingly tense phone call that lasted more than two hours, in which Chinese President Xi Jinping warned US President Joe Biden that when it comes to Taiwan, “if you play with fire, you will burn”.

A full-blown diplomatic incident. Tensions mount over House Speaker Nancy Pelosi .’s potential visit to Taiwan, the island of 24 million that considers China its own territory, but has long been a self-governing democracy.

US officials have warned Pelosi of the risks of the trip, including China’s urging further action against Taiwan.

It is not yet clear when Pelosi will arrive, or whether the trip will take place. She would be the highest-ranking legislator to visit since then Speaker of the United States House of Representatives Newt Gingrich in 1997.

The US Navy sent ships to the South China Sea. It is against the background of Pelosi’s possible visit that a US aircraft carrier, the USS Ronald Reagan, and its assault group returned from a port call in Singapore, Reuters said.
China has become more aggressive towards Taiwan. CNN’s Kevin Liptak reports on the tense hours of conversation between Biden and Xi, noting that Taiwan has emerged as a major dispute between the countries “as US officials fear a more imminent Chinese move on the self-governing island.”
In May, while in Asia, Biden appeared to say: the silent part of US foreign policy aloud when he said the US would respond “militarily” if China attacked Taiwan.
Find out: what you need to know about tensions between China and Taiwan.

While the US does not officially recognize the government of Taiwan, it sells defensively arms to Taiwan — part of a long-standing policy of “strategic ambiguity,” in which the US remains vague about whether it would defend Taiwan in the event of a Chinese invasion.

There are warnings about subversion

A ‘watershed’ warning about tech espionage. CNN recently reported on a scuttled Chinese government plan to fund an ornate garden at the National Arboretum in Washington, DC, which US officials feared could disrupt communications from the US nuclear arsenal.

US officials warn of a dramatic increase in espionage activities by the Chinese government.

Read the full CNN exclusive.

There is the most important economic dependence

Seeking independence from semiconductors. A rare bipartisan agreement to subsidize semiconductor manufacturing in the US was driven largely by the realization that the US technology sector operate and produce more independently than supply chains rooted in China.

The bill passed the House with bipartisan support on Thursday and is now going to Biden’s desk for signature.
“If China decided to stop production or prevent Taiwan from exporting or building its chips, we would have a serious economic and ultimately national security problem,” Biden said from the White House on Tuesday when he lobbied for the legislation. .

Promoting the independence of renewable energy. Democrats waited for semiconductor legislation to be on a glide path to passage with bipartisan support before announcing a deal for another, broader bill — one they’ll try pass even without the help of the Republicans.

Still, the deal announced Wednesday by Senate Democrats for a health care and climate change bill is, in part, intended to similarly build the U.S. renewable energy sector so as not to rely so much on equipment controlled by China.

The deal is possible because West Virginia Senator Joe Manchin bought it. He told a radio show in his home state that the bill would help the US develop batteries for electric cars.

“We rely on ourselves and on Canada, Australia and our favorite nations without relying on the rogue states and those who harm or want to harm us,” he said.

Biden could lift Trump-era tariffs. One enigma of Biden’s economic policy is that he has so far failed to lift the tariffs former President Donald Trump has imposed on China.

Biden was said to weigh the issue, although tariffs were not expected to be the main topic of discussion between him and Xi, according to Liptak’s report. Lifting the tariffs may seem politically unpopular on the surface, but it could help alleviate some of the inflation that has come to dominate the kitchen-table worries of American voters.
The US government is not the only entity struggling with China, which is still a major global manufacturer of so many things, including iPhones. CNN’s Rishi Iyengar wrote a must-read about large multinational corporations — in this case Apple — struggling to leave China.

Iyengar pointed to Apple CEO Tim Cook’s warning that ongoing supply chain bottlenecks caused by China’s continued strict measures to stop the spread of Covid-19 could cost Apple $8 billion next quarter.

“There’s no question that tech manufacturing wants to leave China. They can’t afford the risk of continued supply disruption and they want to gain more control over their ability to serve customers,” said Lisa Anderson, CEO of supply chain company LMA. . Consulting Group, Iyengar said. “That said, China’s scale will not be easy to replicate, and so the transition will take time and investment.”

A major escalation over Taiwan would bring both economic and diplomatic issues together — and could disrupt the global economy just as much or more than Russia’s war on Ukraine.

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