Gina Raimondo, the commerce secretary, heads to China on Saturday with two seemingly contradictory responsibilities: an order to strengthen US business ties with Beijing while also imposing some of China’s toughest trade restrictions on year.
The head of the Commerce Department has traditionally been the government’s biggest champion for the business community at home and abroad, promoting the kind of broad ties US companies have with China, the world’s second-largest economy.
But US-China relations have grown colder as China has become more aggressive in flexing its economic and military might. While China remains an important economic partner, American officials increasingly view the country as a security threat and have imposed a raft of new restrictions aimed at crippling Beijing’s access to technology that could be used to strengthen China’s military or security services.
Most of those restrictions — which have drawn anger and irritation from the Chinese government — were imposed by Ms. Raimondo.
The Commerce Department has issued broad trade restrictions on the sale of chips, software and machinery to China’s semiconductor industry and is mulling an expansion of those rules that could be released as soon as Ms. Raimondo in Washington.
His visit may be the biggest test yet of whether the Biden administration can pull off the balancing act of fostering economic ties with China while curbing some trade in the interest of national security.
Ms. Raimondo will be the fourth administration official to travel to China in recent months, following John Kerry, the president’s special envoy for climate change; Treasury Secretary Janet L. Yellen; and Secretary of State Antony J. Blinken.
Ms. is expected to repeat. Raimondo echoed what his counterparts told Chinese officials: that there is no contradiction between the administration’s goals for encouraging commercial engagement with China and protecting US national security. They argue that the United States can maintain economic relations with China that benefit both countries and encourage peace, while also setting narrow but strict restrictions on China’s access to advanced technology in the interest of national defense.
But the strategy has faced skepticism in both countries. In the United States, some Republicans argue that more benign business ties with China could undercut US industries and leave the country vulnerable to influence from Beijing. And in China, many view what the US government describes as narrow, national security-related actions as a poorly disguised effort to stifle China’s economy.
“I think the Commerce Department has tried to be very targeted,” said Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center. “Now, the Chinese side won’t see it that way.”
For Chinese officials, Ms. Raimondo was some of their best opportunities for engagement in the United States and their biggest source of frustration.
Experts said his visit provides an opportunity for China’s leaders to strengthen trade ties and signal that their country is still open to international business at a time when China’s economy is stumbling, foreign investment went down and a series of raids on foreign-related companies had set executives on edge.
But Chinese officials have also sharply criticized the technology curbs released by his department, a condemnation they are likely to repeat next week. Officials in Beijing have also been highly critical of new restrictions on American investment in some Chinese high-tech industries, which the Biden administration proposed earlier this month.
At a summit in South Africa this week, a Chinese official delivered a prepared statement from Chinese leader Xi Jinping who called on the world to avoid “the depths of a new Cold War” and blamed “some countries, which obsessed with maintaining its hegemony” for working to cripple emerging markets and developing countries.
In addition to export controls, Ms. Raimondo is distributing $50 billion to chip companies that are building facilities in the United States. Any company that receives that funding must agree not to build new factories for making advanced chips in China for at least a decade.
“The Biden administration is looking for a way to attract the Chinese in a very difficult environment,” said Myron Brilliant, a senior counselor at Dentons Global Advisors-ASG who is a former executive vice president of the US Chamber of Commerce. “It is precisely balancing, between the national security agenda they are implementing, while also recognizing that a lot of trade between countries does not affect national security considerations and therefore should not be restricted.”
Ms. is scheduled to meet. Raimondo with high-level Chinese officials and representatives of American businesses in Beijing and Shanghai between Monday and Wednesday. People familiar with government planning say those talks could result in the creation of working groups to discuss export controls and commercial issues that have arisen between China and the United States.
American businesses also hope the Biden administration will push for more intellectual property protections for pharmaceutical companies, greater access to the Chinese market for Visa and Mastercard and the completion of a long-standing Chinese order of Boeing planes, among other goals, people familiar with the talks said.
But those gains, while important for American companies, still seem small compared to the mounting pressures that US companies may now face in China.
China’s booming economy and harsh lockdown during the pandemic are giving pause to businesses considering their presence in the country. The Chinese government has also restricted companies that send data from China abroad, making it harder for multinationals to do business.
Chinese authorities have responded to increased technology restrictions from the United States by banning US chip-maker Micron from selling to companies that handle critical Chinese information and by avoiding a proposed merger between Intel and an Israeli chip-maker with operations in China. And companies exporting from China still face nearly the full range of tariffs imposed by the Trump administration, in addition to new export controls.
The Biden administration has acknowledged tensions in US-China relations, saying China poses a threat to US national security but is still one of the country’s most important economic partners.
“It’s not about, you know, containing China or denying them commodity technology,” Ms. Raimondo about export controls at an event at the American Enterprise Institute in July. “It’s certainly not about denying US companies revenue. It’s about being honest about the fact that China has a strategy of civil military integration, which involves taking our most sophisticated technology and using it to advance their military. And we will not allow that.”
The United States has for decades imposed export controls on the types of technology that can be sent to China, including restricting the sale of satellites and other technology following Beijing’s crackdown on Tiananmen Square in 1989. .
But technology trade limits with China have increased significantly in recent years, as the Trump administration imposed restrictions on Chinese telecom firm Huawei. In October, the Biden administration expanded the limits on all companies using advanced chips in China.
Chip firms, which earn a third or more of their global revenue through sales in China, have also pushed back, saying the new restrictions result in less money to invest in new research and innovation. In July, the chief executives of Nvidia, Qualcomm and Intel met with Ms. Raimondo in Washington to make that case.
It is unclear how much influence, if any, their lobbying has on policies. Ms. Raimondo, a former venture capitalist and governor of Rhode Island, has a long reputation as a business-friendly and pragmatic political actor. But as commerce secretary, he has repeatedly argued that the United States cannot compromise on issues of national security.
“We do not seek to isolate our economy from China’s economy,” said Ms. Raimondo in a speech at the Massachusetts Institute of Technology in November. “We want to continue to promote trade and investment in areas that do not harm our interests or values.”