US Commerce Secretary Rejects Chinese Appeal to Ease Export Controls

AP

12:28 JST, August 30, 2023

BEIJING (AP) — U.S. Commerce Secretary Gina Raimondo said she rebuffed an appeal Tuesday by Chinese leaders to reduce U.S. export controls on technology with possible military uses but the two governments agreed to have experts meet to discuss disputes over protecting trade secrets.

During a visit to revive frosty relations, Raimondo said she conveyed complaints to officials including China’s No. 2 leader, Premier Li Qiang, about Chinese restrictions on U.S. technology companies. She said conditions for foreign companies are getting worse following an expansion of an anti-spying law and raids on consulting firms.

Raimondo joined a series of American officials including Treasury Secretary Janet Yellen who have visited Beijing in the past three months. They are trying to restore relations that are at their lowest level in decades due to disputes over technology, security, Taiwan and other issues.

A key Chinese complaint is limits on access to processor chips and other U.S. technology on security grounds. That threatens to hamper the ruling Communist Party’s ambition to develop artificial intelligence and other industries. The curbs crippled the smartphone business of Huawei Technologies Ltd., China’s first global tech brand.

“Their asks were to reduce export controls on technology” with possible military uses and to retract an order by President Joe Biden that restricts U.S. investment in Chinese companies that might be involved in military development, Raimondo said.

“Of course, I said no,” Raimondo said. “We don’t negotiate on matters of national security.”

The two governments agreed Monday to exchange information about U.S. export controls. Raimondo said Washington hopes that “will increase compliance.”

Meanwhile, the two governments agreed to have experts meet to “start to resolve trade secrets issues,” Raimondo said.

“That is one of the big things I hear constantly from business, protection of trade secrets,” she told reporters.

Earlier, Raimondo met with Premier Li, who appealed for “concrete actions” by Washington to improve relations, a reference to Chinese pressure for changes in U.S. policy on Taiwan, technology and other issues.

“We do hope that the U.S. side will work in the same direction as the Chinese side, show sincerity and take concrete actions,” Li said.

Raimondo said the meeting, which the American Embassy earlier said would be a 10-minute “courtesy call,” lasted one hour and 15 minutes.

Chinese leader Xi Jinping’s government is trying to revive investor interest in China and reassure foreign companies as part of efforts to reverse an economic slump. Raimondo said, however, she didn’t discuss the Chinese economy during her meetings and didn’t get the sense her Chinese counterparts were motivated by the downturn.

Beijing broke off dialogues with Washington about military, climate and other issues in August 2020 in retaliation for a visit by then-Speaker Nancy Pelosi of the U.S. House of Representatives to Taiwan. The Communist Party claims the self-governed island democracy as part of its territory.

Relations already were at a low due to a tariff war launched by then-President Donald Trump over complaints about Beijing’s industrial development strategy. Its trading partners complain China protects its fledgling industries from competition in violation of market-opening commitments and steals or pressures foreign companies to hand over technology.

Conditions for foreign companies have worsened following the expansion of an anti-spying law that some say leaves them unclear about what consumer and other information they can gather. A research firm, Mintz Group, was fined $1.5 million this month on charges it improperly gathered data.

Raimondo said American companies complained to her that they face a “whole new level of challenge” in China. She said she had 120 to 150 phone calls with CEOs and labor leaders in preparation for her trip.

“We need that to be addressed,” Raimondo said. “Any one of those could be addressed as a way to show action.”

Raimondo said she also pressed Chinese leaders to disclose more information about restrictions on U.S. technology companies that appeared to be arbitrary and too unpredictable, but said she received no commitments.

Beijing this year ordered makers of equipment that handles information deemed sensitive to stop using products from the biggest U.S. maker of memory chips, Micron Inc. It said the American company failed a security review but gave no details, fueling suggestions the ban was retaliation for U.S. curbs on technology access.

Raimondo said the tone of her meetings was positive, but that she was realistic about the difficulty of reviving official exchanges and getting results.

“We’ll see if there is action,” Raimondo said.

“We had a lot of candid dialogue,” she said. “I hope this becomes a moment where we start to see action.”

Chinese state media have given positive coverage of the American visitors. But Beijing has given no indication whether it might change trade, strategic and other policies that are straining relations with Washington, Europe and its Asian neighbors.

Also Tuesday, the two sides had “good discussions” about artificial intelligence as a possible area to cooperate on “guardrails and safety,” Raimondo said.

“The world expects our two countries to work together,” she said. “That was met with some receptivity.”

The visits take place under an agreement made by Xi and Biden during a meeting last November in Indonesia.

Raimondo also met with the official in charge of economic relations with Washington, Vice Premier He Lifeng. He sounded an optimistic note, referring to “in-depth exchanges” in July with his American counterpart, Treasury Secretary Janet Yellen.

“I’m ready to work based on that with you, to make new positive efforts to deepen our consensus and extend our cooperation,” He told Raimondo.

Raimondo defended the Biden administration’s strategy of “de-risking,” or encouraging more high-tech manufacturing in the United States and to develop more sources of industrial supplies to reduce disruption. Beijing has criticized that as a possible attempt to isolate China and hamper its development.

“While we will never of course compromise in protecting our national security, I want to be clear that we do not seek to decouple or to hold China’s economy back,” Raimondo told He.

Raimondo said she and Commerce Minister Wang Wentao agreed during a two-hour lunch Monday to “talk informally and as frequently as would be helpful” to revive interaction on trade.

Raimondo said as part of an agreement announced Monday to form a group to discuss other commercial issues, she and Wang would meet once a year and have their deputies meet twice annually.

“It’s not going to solve all of our issues. It doesn’t mean when we talk, I am going to compromise or concede,” Raimondo said. “It means we have a shot at reducing miscalculation and sharing information.”

Officials also agreed to hold a “travel and tourism summit” in early 2024 to work on reviving tourism between the two countries following the end of anti-virus controls in China that blocked most travel into and out of the country, according to Raimondo.

Chinese officials also agreed Tuesday to resume allowing large tour groups from China to visit the United States, Raimondo said.