In One Sentence

• U.S. President Joe Biden and Chinese President Xi Jinping held a summit meeting in Woodside, California.
• During the meeting, President Biden “emphasized” the competitive nature of the bilateral relationship and raised continued concerns about “the PRC’s unfair trade policies, non-market economic practices and punitive actions against U.S. firms.”
• President Xi warned against attempts to “stifl[e] China’s technological progress” and asked the U.S. to lift its “unilateral sanctions so as to provide an equal, fair and nondiscriminatory environment for Chinese businesses.”
• Meanwhile, members of the Asia-Pacific Economic Cooperation (APEC) framework committed to increase focus on sustainability, resilience and inclusiveness regarding trade and investment in the region.
• APEC’s business advisory group had previously recommended members to liberalize trade in environmental goods and services to foster “just and affordable transition” towards sustainability and the green economy.
• Shortly after the Xi-Biden meeting, China’s General Administration of Customs lifted restrictions on poultry imports from seven U.S. states, and China’s anti-trust regulator (SAMR) approved the Broadcom-VMware deal with minor conditionalities attached. 
• The U.S. Commerce Department announced plans to invest US$3 billion to expand U.S. advanced packaging capacity as part of the implementation process of the CHIPS and Science Act.
• In its annual report to Congress, the U.S.-China Economic and Security Review Commission recommended a single export licensing system to tighten enforcement of export controls related to China.
• In the inaugural meeting of the cabinet-level Council on Supply Chain Resilience, the Biden administration committed to strengthen U.S. supply chains on critical technology and goods.

Mark the Essentials

• According to President Biden, China’s unfair trade policies and non-market practices harmed American workers and families, and the United States will “continue to take necessary actions to prevent advanced U.S. technologies from being used to undermine our own national security.” Meanwhile, President Xi argued that the export control, investment screening and sanctions “seriously hurt China’s legitimate interests” and “is nothing but a move to contain China’s high-quality development and deprive the Chinese people of their right to development.”
• In a declaration concerning “principles on integrating inclusivity and sustainability into trade and investment policy,” APEC members upheld “policies that support a free, open, fair, non-discriminatory, transparent and predictable trade and investment environment” as well as an increase in focus on trade and investment policies that advance sustainability, resilience and inclusivity. The declaration emphasized that APEC is a “voluntary, non-binding and consensus-based organization” and reflects the position of all APEC members, although the United States previously said China was the only economy that did not support the principles. 
• Among concerns regarding Beijing’s “unfair trade practices,” the Biden administration specifically highlighted the electric vehicle (EV) market prior to the Xi-Biden meeting. President Biden argued that the manufacturing offshore had cost the United States “tens of thousands of auto jobs” and vowed to address the challenge and “outcompete China and everyone else in the world.”
• Following China’s announcement that producers have to acquire permits before exporting graphite out of China, representatives of North America’s automotive industry told reporters that restrictions on graphite could impact the manufacturing of EV batteries. According to the industry, the restrictions could be part of China’s attempt to counter U.S. preferential policies that encourage American, European, Japanese, and South Korean companies to ‘friend-shore’ to North America.

Keeping an Eye On…

• On November 15, President Joe Biden and President Xi Jinping held a successful summit meeting at the Filoli Estate, 30 miles south of San Francisco. The meeting threw up a number of lower-level ‘deliverables.’ The two sides agreed to: (1) resume their military-to-military dialogue, both at the ministers’ level as well as across their institutionalized defense dialogue mechanisms; (2) jointly tackle the fentanyl crisis, with Beijing pledging to crack down on shipments of fentanyl precursors chemicals to North America in exchange for Washington delisting the Ministry of Public Security’s Institute of Forensic Science from its entity list; (3) convene a U.S.-China working group to address the dangers of AI; and (4) increase direct flights as well as people-to-people contacts between the two countries. A day earlier, the two sides released a joint statement on enhancing cooperation on climate change, including at the on-going COP28 meeting. The breakout of mutual goodwill should not be exaggerated; ‘extreme competition’ and ‘selective decoupling’ remains the ‘new normal’ in ties. Just as an example, on December 1, the Treasury Department is expected to issue tax credit rules that strip out Chinese content to the maximum practicable extent from U.S. electric vehicle (EV) supply chains; China being designated as a “foreign entity of concern.” Just as promptly, on December 1, China’s controls on exports of several categories of natural and synthetic graphite, key materials used in the production of EV batteries and fuel cells, are due to kick-in. High-purity natural and synthetic graphite has vital uses in other clean-tech industries too, and the controls resemble similar curbs imposed in August on the export of germanium and gallium, two minerals critical to the production of semiconductors. The thinking, presumably, at the Chinese end is that if these minerals and materials are to be made available to non-Chinese players in the industry, those players will either have to set up production in China to source these inputs or plead with their national governments to allow Chinese-invested companies to set up production facilities on their home soil. While this strategy will cut no ice in Washington, it could sway outbound and inbound investment decision-making in European capitals. The contest to reshore and ‘friendshore’ and thereby re-wire supply chains has just begun, and there are many more chapters yet to be written.

Expanded Reading

• FACT SHEET: President Biden Announces New Actions to Strengthen America’s Supply Chains, Lower Costs for Families, and Secure Key Sectors, The White House, November 27, 2023
• China lifts HPAI restrictions for seven US states – GAIN, The Poultry Site, November 27, 2023
• CHIPS for America Releases Vision for Approximately $3 Billion National Advanced Packaging Manufacturing Program, National Institute of Standards and Technology, November 20, 2023
• San Francisco Principles on Integrating Inclusivity and Sustainability into Trade and Investment Policy, Asia-Pacific Economic Cooperation, November 17, 2023
• President Xi Jinping Meets with U.S. President Joe Biden, Ministry of Foreign Affairs of the People’s Republic of China, November 16, 2023
• Readout of President Joe Biden’s Meeting with President Xi Jinping of the People’s Republic of China, The White House, November 15, 2023
• Business Leaders: Embrace Collaboration to Tackle Global Challenges in Equity, Sustainability and Trade, APEC Business Advisory Council, November 14, 2023
• Remarks by President Biden on Delivering for Working Families and Creating Good-Paying Union Jobs | Belvidere IL, The White House, November 9, 2023