In One Sentence

• Former U.S. National Security Advisor and Secretary of State Henry Kissinger traveled to China once again last week. While the State Department was quick to relegate the visit as an unofficial visit by a “private citizen,” President Xi Jinping welcomed Kissinger as an ‘old friend’ of China and used the visit to underscore the need for “mutual respect, peaceful coexistence and win-win cooperation” in the U.S.-China relationship. 
• Xi renewed calls to liberalize the Chinese economy into a “higher-level open economy” at a meeting of the Central Commission for Deepening Reform amid “a complex and severe international situation.” 
• The U.S. Chamber of Commerce released an essay urging the Biden administration to forgo attacks on trade writ large in the name of national security and called instead for more targeted measures.
• The Senate unanimously passed a bill last week to formalize the Biden administration’s trade pact with Taiwan and lay out procedures for continued negotiation and oversight.
• U.S. Trade Representative Katherine Tai told the Senate Finance Committee that she expects the mandated four-year review of the administration’s Section 301 tariffs on Chinese goods to be completed this fall, and she defended the tariffs as having successfully reduced U.S. imports from China.

Mark the Essentials

• Commentators have observed a “striking” contrast between Beijing’s warm welcome of Kissinger and cooler reactions to the recent visits of three high-level Biden administration officials. Expressing high regards for Kissinger, Chinese President Xi said that China-U.S. relations “will always be linked with the name of Henry Kissinger.” During the meeting, Kissinger said “it is imperative to maintain the principles established by the Shanghai Communique, appreciate the utmost importance China attaches to the one-China principle, and move the relationship in a positive direction,” while Xi said “China is willing to discuss with the U.S. side the right way for the two countries to get along.”
• According to U.S. Chamber of Commerce President and CEO Suzanne Clark, the Biden administration’s proposed “modern industrial and innovation strategy” is a “fallacy” as it seeks to undermine “the bipartisan consensus on trade” which has delivered growth and progress to the United States. While sharing the administration’s concerns about China, Clark called on the administration to “safeguard U.S. national security with appropriately scoped and targeted measures” as opposed to “railing at trade” and its side benefits (e.g., efficiency and lower costs) that actually stimulates U.S. competitiveness and innovation. U.S. Trade Representative Katherine Tai and National Security Advisor Jake Sullivan have recently advocated for a “unapologetically positive vision” that shifts from trade liberalization to worker protection and high standards.
• In addition to providing congressional approval for the U.S.-Taiwan trade pact, the Taiwan trade bill also directs the Office of the U.S. Trade Representative to ensure “robust” congressional consultation and transparency with regard to any further agreement with Taiwan, including by promptly providing negotiating texts prepared by both sides. The administration has argued that the Taiwan trade pact does not require congressional approval, while lawmakers from both parties have contended that congressional approval is a must for the Taiwan deal as well as similar initiatives such as the Indo-Pacific Economic Framework for Prosperity. Commentators and legal experts have similarly raised concerns about the problem of authority concerning trade policy and trade-related deals between the administration and Congress both on the Taiwan trade pact and in broader contexts. 
• A number of lawmakers have expressed support for the Section 301 tariffs in general, but have argued that additional and more transparent exclusion processes are warranted to protect U.S. consumers and businesses and prevent U.S. importers from bearing the majority, if not nearly the full cost of the tariffs. In response, Tai argued that the tariffs are not necessarily linked to rising consumer prices and have led to outcomes “consistent with” U.S. objectives such as reducing the value of certain U.S. imports. Tai said that USTR is reviewing the overall structure and effectiveness of the tariffs, consulting public views and “continues to consider additional exclusion processes, as warranted.”

Keeping an Eye On…

• The issuance of the Shanghai Communique in February 1972 was a pivotal moment in U.S.-China relations. For the United States, the fundamental strategic calculus that underpinned its China rapprochement was, if Moscow and Beijing were more afraid of each other than they were of Washington, that fear would present an unprecedented opportunity for American Cold War diplomacy. Improved U.S.-China relations became the key to the Nixon administration’s strategy to modify Soviet conduct. For China, the calculus was simpler: to deny Moscow the attempt to geopolitically encircle China and dominate continental Asia. The Communique thus laid the groundwork for a tacit U.S.-China alignment to counter Soviet expansionism in Asia. Today, that premise no longer holds; Russia is now the balancing power in the U.S.-China equation. The political drivers that facilitated the rapprochement are also inapplicable today. At the time, both countries were facing domestic frailty. Regime disunity following Lin Biao’s death and the cultural revolution’s disruption weighed on Mao Zedong and Zhou Enlai. The Vietnam quagmire and inflationary pressure from the fraying gold-dollar link, as well as the Great Society programs, weighed on Nixon and Kissinger. Today, neither country feels its back against the wall in the same way. That said, the Shanghai Communique remains relevant to the 21st-century era of US–China strategic competition. In Shanghai, the two sides had trained their focus on the big picture and were not shy to memorialize their differences. No effort was made to mask the divergent stances on Japan, Korea, Taiwan and Indochina. But also, no effort was spared to situate these divergent perspectives within a broader framework of stable and peaceable coexistence. At a time when U.S.-China relations are suffering due to the privileging of the ‘extreme competition’ tendencies in the bilateral relationship, the Communique provides an object lesson in the constructive management of differences. The juxtaposing of divergent policy positions within a steadying framework could yet create a balance between the goals pursued by Washington and Beijing and the requirements of the Asian and international systems at large. In his famous treatise of European peacemaking in the wake of the Napoleonic Wars, Henry Kissinger observed that the essence of wise international relations was the transformation of force into reciprocal obligation (i.e., agreements) by identifying a legitimizing principle of order based on a loose consensus on the nature of justice in the international system. The U.S. and China must commit to a refashioned relationship founded on these precepts-one that keeps tensions within a manageable range, prioritizes stability and coexistence, encourages communication, and privileges a constructive working relationship in areas of common interest without trampling on the other party’s system, values, and regional commitments. Kissinger will not be there to sculpt the consensus this time. Which begs the question: Is there a successor waiting in the wings?

Expanded Reading

• ‘Erroneous’ China Tariff Ruling Called into Question, Sourcing Journal, July 25, 2023 [Paywall]
• US-Taiwan trade pact key to countering diplomatic isolation, Taipei’s top trade negotiator says, CNN Business, July 24, 2023
• Why Kissinger Went to China — Again, Politico, July 22, 2023
• USTR Tai calls U.S. tariffs on Chinese goods ‘significant’ leverage, Reuters, June 22, 2023 [Paywall]
• China’s Xi gets nostalgic with ‘old friend’ Kissinger, Reuters, July 21, 2023
• White House regrets Kissinger had better access in Beijing than current US officials, Reuters, July 21, 2023 [Paywall]
• Trade Keeps Delivering for America, U.S. Chamber of Commerce, July 17, 2023
• Xi stresses establishing new systems for higher-level open economy, ChinaDaily, July 12, 2023
• Yellen raised China’s hopes for tariff cut; U.S. politics will crush them, Reuters, July 12, 2023 [Paywall]
• Xi Calls for More Economic Opening, Trade as Recovery Falters, Bloomberg, July 11, 2023 [Paywall]
• The New U.S.-Taiwan Trade Agreement and Its Approval, Lawfare, July 5, 2023
• Taiwan boosts economic diplomacy despite Chinese pressure, Responsible Statecraft, July 3, 2023