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    The Agency at the Center of America’s Tech Fight With China

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    Washington lawmakers, lobbyists and other parties have been vying to influence how the Bureau of Industry and Security, under the Biden administration, will approach a technology relationship with China.WASHINGTON — As tensions between the United States and China escalate, a little-known federal agency is at the center of a debate in the Biden administration about how tough an approach to take when it comes to protecting American technology.The Bureau of Industry and Security, a division of the Commerce Department, wields significant power given its role in determining the types of technology that companies can export and that foreign businesses can have access to.In recent months, Washington lawmakers, lobbyists and other interested parties have been vying to influence how the agency, under the Biden administration, will approach a technology relationship with China that is both crucial for American industry and national security.China hawks, including a collection of national security experts, congressional Republicans and progressive Democrats, say that in the past, American industry has held too much sway over the bureau. They have been pressing the administration to select a leader for the agency who will take a more aggressive approach to regulating the technology that the United States exports, according to people familiar with the discussions.Their opponents, including some current and former Commerce Department employees, and many in industry and Washington think tanks, caution that putting a hard-liner at the helm could backfire and harm U.S. national security by starving American industry of revenue it needs to stay on the cutting edge of research and encouraging it to relocate offshore.“It’s a very complicated relationship between the economic and national security interest,” said Lindsay Gorman, a fellow for emerging technologies at the German Marshall Fund. “The fine line the Commerce Department has to walk is protecting against national security risks that may not be top of mind for the industry in the short run, without killing the golden goose.”The bureau’s powers became clear during the Trump administration, which wielded its authority aggressively, though somewhat erratically, using the agency to curb exports of advanced technology goods like semiconductors to the telecommunications company Huawei and other Chinese businesses. It weaponized the bureau’s so-called entity list, adding hundreds of Chinese companies to a list that blocks exports of American products to companies or organizations that pose a national security threat.But many of these regulations were enacted haphazardly and often did less to restrict Chinese access to American technology than the Trump administration intended. And at times, President Donald J. Trump offered Chinese companies concessions from these punishments to try to advance a trade deal with China, including offering a reprieve for the Chinese telecom company ZTE and licenses so companies could continue supplying goods to Huawei and Semiconductor Manufacturing International Corporation.The Biden administration is still carrying out a review of its China policies and has not indicated how it plans to use the bureau’s powers. Its initial engagement with China got off to an acrimonious start last week at a meeting in Anchorage, and President Biden, in his first news conference on Thursday, emphasized investing heavily in new technologies to compete with Beijing.“The future lies in who can, in fact, own the future as it relates to technology, quantum computing, a whole range of things, including in medical fields,” Mr. Biden said.“I see stiff competition with China,” he added. “They have an overall goal to become the leading country in the world, the wealthiest country in the world and the most powerful country in the world. That’s not going to happen on my watch because the United States are going to continue to grow and expand.”Last week, the Commerce Department said it had issued subpoenas to multiple Chinese technology companies asking them to provide more information on their activities, potentially presaging tighter restrictions on their use and transfer of American data.U.S. officials will soon need to make difficult choices about specific policy actions. That includes how to use the Commerce Department’s powers, including whether to block more exports of American technology, whether to keep or scrap Mr. Trump’s tariffs on foreign metals, and how to set the standards for national security reviews of foreign investments.The complication stems from China’s position as both the largest export market for many multinational companies, and America’s biggest acknowledged security threat.China’s authoritarian leaders have proposed plans to expand their market share in emerging industries like semiconductors, artificial intelligence and quantum computing, while easing the country’s dependence on foreign energy and technology. And as Beijing’s economic influence and technological capacities grow, so will its military and geopolitical influence.“China is the only country with the economic, diplomatic, military, and technological power to seriously challenge the stable and open international system — all the rules, values, and relationships that make the world work the way we want it to,” Secretary of State Antony J. Blinken said this month in his first major address, in which he called the U.S. relationship with China “the biggest geopolitical test of the 21st century.”The Commerce Department is responsible for promoting the interests of American business and has always had a close relationship with industry. But as the China tech competition has intensified, the department has taken on a larger role in regulating company activity, as well. In 2018, Congress updated its laws governing export controls, giving the Bureau of Industry and Security more power to determine what kind of emerging technologies cannot be shared with China and other geopolitical rivals.A semiconductor factory in Nantong, China. The country accounts for about one-third of the industry’s revenue.Agence France-Presse — Getty ImagesBut critics say the bureau has given companies and industry groups too much influence over its regulatory process and failed to adopt to the new realities of global competition.“The industry viewpoint has been the commerce viewpoint since the fall of the Soviet Union, and they’re not able to make the adjustment that the world has changed,” said Derek Scissors, a resident scholar at the American Enterprise Institute who advocates stronger export restrictions.“The industry capture is not, in my view, industry saying, ‘Hey, meet me at the Jefferson Memorial and I have a suitcase of money for you.’ It’s that these guys have been trained for 30 years to think that exports are good for America and that’s that,” Mr. Scissors said. “So surprise, they don’t want tighter export controls.”But distancing the bureau from industry may have repercussions, too. Critics say that without the guidance of industry on complex technological issues, regulations can easily backfire, harming the American economy while doing little to combat security threats from China. And any policy that hamstrings innovation could in turn hold back the American military, which acquires most of its technology from the private sector.John Neuffer, the chief executive of the Semiconductor Industry Association, said that China accounted for about one-third of his industry’s revenue, and that it would be “disastrous” for semiconductor companies to not have access to such a huge and growing market.“When you start cutting off capital profits that can flow into R&D, many of them coming from the huge Chinese market, you really undermine our ability to stay at the tip of the spear in terms of semiconductor innovation,” Mr. Neuffer said.“The sense of urgency in recent years inclined our leadership to make decisions without reference to what industry thought,” said Daniel H. Rosen, a founding partner of Rhodium Group. “We’re not going to serve the American interests if we don’t consider commercial interests and national security interests at the same time.”The Biden administration has already run into the political minefield surrounding the bureau. In her confirmation hearing in January, Gina Raimondo, the new secretary of commerce, attracted criticism from Republicans when she declined to commit to keeping Huawei on the bureau’s entity list. Ms. Raimondo later said that she would use the entity list “to its full effect,” and that Huawei and ZTE should be on the list.With Ms. Raimondo sworn in to her post this month, the Biden administration is considering candidates to lead the Bureau of Industry and Security. It has become a contentious process, a kind of proxy battle among trade advisers, industry groups and lawmakers of both parties for the future of the United States’ tech strategy.One early contender, Kevin Wolf, a partner in the international trade group at the law firm Akin Gump, has run into resistance from some China hawks in Washington over his industry ties. Mr. Wolf, who was previously assistant secretary at the bureau, issued the sanctions against ZTE. He has consistently argued that restrictions that are unclear and unpredictable can backfire, “harming the very interests they were designed to protect.”But critics have found fault with his work on behalf of industry since leaving the government, including counseling clients on what is permitted under Mr. Trump’s regulations, and trying to obtain licenses for his clients to supply products to Huawei and S.M.I.C.Mr. Wolf said that he had merely helped companies understand the new rules, as other export control lawyers do, and that it was the Trump administration that was responsible for creating a new process to grant companies licenses to supply products to listed entities. Some who believe the Bureau of Industry and Security requires a more fundamental transformation have instead pushed for James Mulvenon, an expert on the Chinese military at research firm Defense Group, who has publicly called for refocusing the bureau’s mandate to place national security interests before those “of Silicon Valley, Wall Street and other multinationals.”The administration may also be considering less prominent candidates for the bureau’s three Senate-confirmed posts, like Brian Nillson, a former employee of the Bureau of Industry and Security and the State Department, or export control lawyers like Douglas Jacobson and Greta Lichtenbaum, people familiar with the deliberations say.Whoever leads the bureau, officials at the National Security Council are likely to play a guiding role, according to people familiar with the deliberations. More

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    How Can Biden Bring Back Manufacturing Jobs? Weaken the Dollar

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateWhen the Checks Run OutThe Economy in 9 ChartsThe First 6 MonthsRevere Copper Products in Rome, N.Y., once had two plants and nearly 600 workers. Today the company employs about 300 and operates only one plant.Credit…Joshua Rashaad McFadden for The New York TimesHow Can Biden Bring Back Manufacturing Jobs? Weaken the DollarCritics of a strong currency say it hurts American factory workers by making imports cheap.Revere Copper Products in Rome, N.Y., once had two plants and nearly 600 workers. Today the company employs about 300 and operates only one plant.Credit…Joshua Rashaad McFadden for The New York TimesSupported byContinue reading the main storyMarch 1, 2021, 10:47 a.m. ETPresident Biden has made reviving American manufacturing a top priority. To deliver, he may first have to deal with something even more fundamental to the U.S. economy: the strength of the dollar.Because a strong dollar lowers the price of imports and raises the price of exports, it gives foreign companies an advantage over American competitors and can drag down U.S. employment.“Dollar overvaluation is the big problem,” said Mike Stumo, chief executive of the Coalition for a Prosperous America, which represents small and midsize manufacturers and farmers. Mr. Stumo describes policies that prop up the dollar as a “war on the working class.”Few recent presidents have devoted much attention to this issue. Donald J. Trump fulminated against the decline of U.S. manufacturing and occasionally mused about weakening the dollar, but focused his policies more on tariffs than on currency.But Mr. Biden has hired a handful of senior economic advisers who are concerned about the dollar’s strength and have explored ways to reduce it.“There are a lot of folks who want to try some new things in there,” said Mr. Stumo, whose group presented ideas for weakening the dollar to three of Mr. Biden’s agency transition teams.The dollar’s strength over much of the past few decades has bloated the U.S. trade deficit, which roughly tripled as a share of gross domestic product in the late 1990s and has remained high.At its simplest level, the trade deficit represents a kind of leakage from the U.S. economy: Americans buy more in goods and services from abroad than the rest of the world buys from the United States, and the country takes on foreign debt to pay for the difference. If Americans bought more domestically made products and fewer imports, the spending would create jobs for U.S.-based workers and require less debt.Traditionally, most economists have nonetheless taken a blasé posture toward trade deficits, arguing that they reflect underlying economic fundamentals — namely, a country’s appetite to consume or invest rather than save.A country with a young population may run a large trade deficit because young workers tend to consume more than older workers, who are focused on saving for retirement. An economy growing unusually quickly can also run a larger-than-usual trade deficit, as spending spikes for goods like cars and phones.The problem for the United States is that its trade deficit appears to be far larger than demographics and other fundamentals would predict. According to an analysis by the International Monetary Fund, a reasonable current account deficit, a somewhat broader measure of the trade deficit, would have been about 0.7 percent of the $21 trillion U.S. economy in 2019. The actual deficit, adjusted for short-term factors like the strength of the economy, was about 2 percent of gross domestic product — larger by hundreds of billions of dollars.This divergence between economic models and the actual trade deficit partly reflects the dollar’s strength relative to other currencies. In some cases, other countries have suppressed their currencies’ value to make their goods cheaper for Americans.China was the world’s leading currency manipulator during roughly the first decade of the 2000s, according to a paper by Joseph E. Gagnon, a former Federal Reserve Board economist now at the Peterson Institute for International Economics, and C. Fred Bergsten, the institute’s founding director. The paper estimated that currency manipulation cost the United States one million to five million jobs in 2011. Manufacturing jobs tend to be hit particularly hard by the strong dollar because manufactured goods are easy to import.Over the past several years, medium-size economies like Switzerland, Taiwan and Thailand have been most active in holding down their currencies, Dr. Gagnon found in a more recent study. Collectively, currency interventions by such countries have been more than half the size of China’s earlier interventions, he notes.But the dollar can appreciate even without currency interventions — for example, if foreign investors increase their appetite for American bonds, which require dollars to buy, as they have in recent years.The former Rome Cable complex in Rome. President Biden has made reviving American manufacturing a top priority.Credit…Joshua Rashaad McFadden for The New York TimesDr. Gagnon estimates that as a result of these forces, the dollar was 10 to 20 percent above its expected value in 2019, probably costing hundreds of thousands of manufacturing jobs.Revere Copper Products in Rome, N.Y., which makes copper strip used in automobiles and air-conditioners, has suffered from these changes. In 2000, Revere had two plants and nearly 600 workers. Today the company, founded in 1801 by that Revere, employs about 300 and operates only one plant.The strong dollar has made it difficult for the company’s customers to compete with imports, said its chairman, Brian O’Shaughnessy. In the 1990s, for example, Revere supplied several American door-lock makers with copper or brass. Today, Mr. O’Shaughnessy said, most of the lock makers have shifted production abroad, undercut by imports made cheaper by the strong dollar.“The industry moved offshore,” he said. “It was currency. It overwhelms everything else.”The U.S. government could reverse these trends using one of two approaches. It could essentially fight fire with fire — buying enough foreign currency to lower the value of the dollar by 10 to 20 percent and restoring the equilibrium that would exist without foreigners’ excessive dollar-buying. Or it could tax foreign purchases of U.S. assets, like stocks and bonds, an approach prescribed in a bill sponsored by Senators Tammy Baldwin, a Wisconsin Democrat, and Josh Hawley, a Missouri Republican.A tax would make these investments less attractive to foreigners and therefore reduce their need for dollars. It would also raise revenue for the government.But a tax would ignite opposition from financial firms, which would see it as driving away customers, and could raise interest rates by reducing the supply of potential lenders to the U.S. government. (John R. Hansen, a former World Bank economist who has designed such a proposal, said the rate increases were not likely to be significant.)To date, a major obstacle to action on currency and the trade deficit has been resistance from senior economic policymakers in the U.S. government. Mr. Stumo said his group’s efforts to persuade the Obama administration of the dangers of an overvalued dollar and a large trade deficit were “the opposite of fruitful.”Dr. Gagnon said that institutionally, the Fed and the Treasury Department tended to oppose adjusting the value of the dollar, both on philosophical grounds — economists there believe that markets should set exchange rates — and on practical ones. Doing so could require complicated judgments about when a foreign country’s efforts to influence the dollar should trigger an intervention, while the Treasury is likely to resist anything that makes U.S. government debt harder to sell, like a tax on purchases of debt by foreigners.Menzie Chinn, an economist at the University of Wisconsin, said foreign investors could find ways around paying the tax, as they have to some extent in similar instances abroad.Brian O’Shaughnessy, the chairman of Revere Copper Products, said the strong dollar had made it difficult for his customers to compete with imports.Credit…Joshua Rashaad McFadden for The New York TimesEven experts, like Dr. Bergsten, who acknowledge that the dollar is overvalued and results in job losses for manufacturing workers are reluctant to call for aggressive action. Some argue that the trade deficit is helping sustain economies abroad during a delicate moment for the global economy.“It would essentially be an act of economic war to aggressively intervene to push the dollar down against the euro, the yen, the Canadian dollar,” Dr. Bergsten said. “Those countries are doing worse than we are.”But the political landscape has shifted in recent years, as reflected in Mr. Trump’s rise, and momentum for reining in the dollar and the trade deficit may be building. Though Mr. Trump’s tariffs on products like steel and aluminum were ineffective on this front — tariffs tend to increase the dollar’s value, leading to more imports of other goods — the Trump administration gave the Commerce Department new authority to penalize countries that had weakened their currencies.It used that authority for the first time in November to impose tariffs on Vietnamese tires, after the A.F.L.-C.I.O. submitted a petition saying Vietnam had used its currency as an unfair subsidy to producers.Mr. Biden’s team may be picking up the baton. One of his top economic advisers, Jared Bernstein, has long expressed concern about the overvaluation of the dollar. A second, Bharat Ramamurti, oversaw economic policy for Senator Elizabeth Warren’s presidential campaign, which proposed “more actively managing our currency value to promote exports and domestic manufacturing.” And the Biden administration hired Brad W. Setser, a skeptic of the strong dollar, as a counselor to its trade representative.These aides may face resistance from Biden advisers with more orthodox views. Treasury Secretary Janet L. Yellen said at her confirmation hearing in January that the dollar’s value “should be determined by markets” and that “the United States does not seek a weaker currency to gain competitive advantage.”But some former Treasury officials interpreted this as a more nuanced position than that of other recent secretaries, who have explicitly supported a strong dollar.“Secretary Yellen speaks for the administration on the dollar, and her approach fully reflects the president’s focus on fostering strong and equitable economic growth,” a White House spokeswoman said.Those who have discussed the dollar and the trade deficit with Mr. Biden’s advisers have gotten the impression that many see it as a problem and are willing to press for action internally.“I think they are probably having that conversation,” Mr. Stumo said. “Who comes out on top — we’ll see.”Ana Swanson More

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    Amid Shortfalls, Biden Signs Executive Order to Bolster Critical Supply Chains

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyAmid Shortfalls, Biden Signs Executive Order to Bolster Critical Supply ChainsThe order is intended to help insulate the economy from future shortages of critical imported components by making the United States less reliant on foreign supplies.President Biden on Wednesday signed an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing.Credit…Doug Mills/The New York TimesJim Tankersley and Feb. 24, 2021Updated 7:28 p.m. ETWASHINGTON — Automakers have been forced to halt production because of a lack of computer chips. Health care workers battling the coronavirus pandemic had to make do without masks as the United States waited on supplies from China. And pharmaceutical executives worried that supplies of critical drugs could dry up if countries tried to stockpile key ingredients and block exports.Deep disruptions in the global movement of critical goods during the pandemic prompted President Biden on Wednesday to take steps toward reducing the country’s dependence on foreign materials. He issued an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing of semiconductors, pharmaceuticals and other cutting-edge technologies.In remarks at the White House, the president cast the move as an important step toward creating well-paying jobs and making the economy more resilient in the face of geopolitical threats, pandemics and climate change.“This is about making sure the United States can meet every challenge we face in the new era,” he said.But the effort, which has bipartisan support, will do little to immediately resolve global shortages, including in semiconductors — a key component in cars and electronic devices. A lack of those components has forced several major American auto plants to close or scale back production and sent the administration scrambling to appeal to allies like Taiwan for emergency supplies.Administration officials said the order would not offer a quick fix but would start an effort to insulate the American economy from future shortages of critical imported components.Mr. Biden discussed the issue in the Oval Office on Wednesday afternoon with nearly a dozen Republican and Democratic members of Congress. Senator Chuck Schumer, Democrat of New York and the majority leader, called for the crafting and passage of a bill this spring to address supply chain vulnerabilities.“Right now, semiconductor manufacturing is a dangerous weak spot in our economy and in our national security,” Mr. Schumer said. “Our auto industry is facing significant chip shortages. This is a technology the United States created; we ought to be leading the world in it. The same goes for building-out of 5G, the next generation telecommunications network. There is bipartisan interest on both these issues.”Republicans emerged from the White House meeting optimistic that such efforts could soon move forward. Representative Michael McCaul, Republican of Texas, said he was pleased to see that the White House made the issue a top priority and that the president was receptive. “His words were, ‘Look, I’m all in,’” he said.Mr. McCaul said that much of the conversation revolved around legislation that Congress had passed last year to incentivize the chips industry — but which still needs funding for research grants and a refundable investment tax credit — as well as the current chips shortage and possible looming job losses in the auto industry.“China is looking at investing $1 trillion in their digital economy,” Mr. McCaul said. “If we’re going to be competitive, we have to incentivize these companies to manufacture these advanced chips in the United States.”Mr. Biden called the meeting one of the best of his presidency so far. “It was like the old days,” he said. “People were actually on the same page.”A global semiconductor shortage has led to production delays for American automakers.Credit…Mohamed Sadek for The New York TimesThe president ordered yearlong reviews of six sectors and a 100-day review of four classes of products where American manufacturers rely on imports: semiconductors, high-capacity batteries, pharmaceuticals and their active ingredients, and critical minerals and strategic materials, like rare earths.The Coronavirus Outbreak More

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    Global Chip Shortage Challenges Biden’s Hope for Manufacturing Revival

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine RolloutSee Your Local RiskNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyGlobal Chip Shortage Challenges Biden’s Hope for Manufacturing RevivalA global shortage of a key component for cars and electronics has shuttered American factories and set off fierce competition to secure supplies.The shortage of a vital component for automobiles, phones, refrigerators and other electronic devices is posing an early challenge to the Biden administration’s promise to revive a manufacturing sector depressed by the coronavirus pandemic.Credit…Thomas Samson/Agence France-Presse — Getty ImagesFeb. 18, 2021, 4:11 p.m. ETWASHINGTON — President Biden came into office with plans to help the economy recover from the coronavirus pandemic and spur a domestic manufacturing revival for goods such as automobiles and semiconductors.But one month into his presidency, a global chip shortage has shuttered auto factories in the United States, slowed shipments of consumer electronics and called into question the security of American supply chains.The shortage of a vital component for automobiles, phones, refrigerators and other electronic devices is posing an early challenge to the administration’s promise to revive a manufacturing sector depressed by the pandemic. And it has spurred an effort by the administration to reach out to U.S. embassies and foreign governments to try to alleviate the shortage, even as the White House acknowledges that there are most likely few solutions to the supply crunch in the short term.The White House plans to issue an executive order soon that will take steps to address these kinds of vulnerabilities in critical supply chains over the longer term, an administration spokesperson said on Thursday. The order will begin a review of domestic manufacturing and supply chains for critical materials — including rare earths, medical supplies and semiconductors — with a particular focus on reducing dependencies on unreliable or unfriendly foreign actors.In the meantime, administration officials have begun looking for ways to ease the immediate shortage. Jake Sullivan, the national security adviser, and Brian Deese, the director of the National Economic Council, have been involved in efforts to increase chip availability; Sameera Fazili, the deputy director of the National Economic Council, and Peter Harrell, a senior director at the National Security Council, are leading the focus on supply chains, the White House spokesperson said.The United States has also tried to leverage its ties with Taiwan, one of the world’s largest chip manufacturers, to make sure American customers are not disadvantaged. In a letter sent on Wednesday, Mr. Deese thanked Wang Mei-Hua, the Taiwanese minister of economic affairs, for her “personal attention and support in resolving the current shortages faced by American automobile manufacturers.”Over the past year, the Trump administration tried to strengthen ties with the Taiwanese government and manufacturers like Taiwan Semiconductor Manufacturing Company to counter China’s growing influence over the chip market.The Biden administration is also meeting with auto companies and suppliers to identify bottlenecks and to urge them to work together to address the shortage. But the White House has acknowledged that its options to alleviate any shortfall are likely to be limited, given the fierce global competition for semiconductors. Many chip makers are already running near maximum capacity, and it will take at least several months to further ramp up production, analysts say.The shortage has been particularly disruptive for auto manufacturers because the production of vehicles relies on dozens of computer chips for electronic components that control engines, transmissions, entertainment systems, brakes and other systems. Both General Motors and Ford have estimated that the shortage will lower their operating profit by at least $1 billion this year.G.M. has halted production at one plant in the United States, one in Canada and another in Mexico until at least mid-March. At a fourth plant, the company has decided to produce vehicles without the electronics that are in short supply. When components become available, G.M. will install them and then ship the vehicles to dealers.The Coronavirus Outbreak More

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    Biden and China: Administration Rethinks Relations

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    #masthead-section-label, #masthead-bar-one { display: none }The Presidential InaugurationHighlightsPhotos From the DayBiden’s SpeechWho Attended?Biden’s Long RoadAdvertisementContinue reading the main storySupported byContinue reading the main storyBiden on ‘Short Leash’ as Administration Rethinks China RelationsThe Biden administration is under intense pressure to maintain former President Donald J. Trump’s curbs on China, even as it tries to develop a more comprehensive and effective strategy.President Biden faces an enormous challenge in trying to formulate a strategy to deal with China at a time when much of Washington treats any relations with Beijing as toxic.Credit…Doug Mills/The New York TimesFeb. 17, 2021, 2:22 p.m. ETWASHINGTON — Biden administration officials have tried to project a tough line on China in their first weeks in office, depicting the authoritarian government as an economic and security challenge to the United States that requires a far more strategic and calculated approach than that of the Trump administration.They have also tried to send a message: While the administration will be staffed by many familiar faces from the Obama administration, China policy will not revert to what it was a decade ago.These early efforts have not concealed the enormous challenge President Biden faces in trying to formulate a strategy to deal with China at a time when any relations with Beijing are treated as thoroughly toxic in Washington. Political adversaries, including Republican lawmakers, have already begun scrutinizing the statements of Mr. Biden’s advisers, ready to pounce on any effort to roll back President Donald J. Trump’s punishments, including tariffs and bans on exporting technology.Ted Cruz, the Republican senator from Texas, has placed a hold on the confirmation of Gina Raimondo, Mr. Biden’s nominee for commerce secretary, delaying a vote on her confirmation, for declining to explicitly commit to keeping the Chinese telecom company Huawei on a national security blacklist. Some Republican lawmakers have also criticized Linda Thomas-Greenfield, Mr. Biden’s pick for U.N. ambassador, for giving a speech at a Confucius Institute, an organization some have described as disseminating Chinese propaganda, and painting a rosy picture of China’s activities in Africa.Several Republicans, including Senator Charles E. Grassley of Iowa, also put out statements last week criticizing a move by the Biden administration to withdraw a rule proposed during the Trump administration that would require universities to disclose their financial ties to Confucius Institutes, organizations set up to teach Chinese language and culture in American schools.“The Biden administration is going to be on a very short leash with respect to doing anything that is perceived as giving China a break,” said Wendy Cutler, a vice president at the Asia Society Policy Institute and a former U.S. trade negotiator.Mr. Trump’s supporters credit him with taking a far more aggressive approach than his predecessors to policing China, including dusting off many rarely used policy tools. That includes placing major tariffs on Chinese goods, limiting Beijing’s access to sensitive American technology exports, imposing sanctions on Chinese officials and companies over human rights violations and securing economic concessions from China as part of a trade deal.But Mr. Trump’s critics, including many in the Biden administration, say his spate of executive orders and other actions were inconsistent and piecemeal, and often more symbolic than effective.Even as Mr. Trump issued harsh punishments on some fronts, he also extended a lifeline to the Chinese telecom company ZTE, delayed sanctions related to human rights violations in China’s Xinjiang region and publicly flattered President Xi Jinping of China as he sought his trade deal. Many of the executive actions Mr. Trump took against China were left incomplete, or were riddled with loopholes.And his policies may have worsened American competitiveness in some areas, according to a report published Wednesday by the consulting firm Rhodium Group and the U.S. Chamber of Commerce China Center. The report found steep costs from the kind of economic “decoupling” that Mr. Trump pursued, including a $190 billion annual loss in American economic output by 2025 if all U.S.-China trade was subject to the type of 25 percent tariff that Mr. Trump imposed on $250 billion of Chinese goods.Daniel Rosen, a founding partner at Rhodium Group, said the Biden administration needed to consider more than politics or ideology when forging China policy, including carefully weighing the cost of its approach to industry.“Obviously politics is king right here in this moment, with nobody in leadership or aspiring to leadership wanting to get outflanked on who is tough on China,” he said. “We’re not going to serve the American interests if we don’t consider commercial interests and national security interests at the same time.”The Biden administration has argued that by being more strategic in how it addresses China, it will ultimately be more effective than the Trump administration. It has laid out an ambitious task as it looks to not only crack down on China for what it sees as unfair trade practices but also develop a national strategy that helps build up America’s economic position to better counter Chinese competition.Speaking at the Atlantic Council in late January, Jake Sullivan, the national security adviser, said the United States first needed to “refurbish the fundamental foundations of our democracy” by dealing with issues like economic and racial inequity, as well as making investments in emerging technologies like artificial intelligence, quantum computing and clean energy.Mr. Biden has also emphasized the importance of working with allies and international institutions to impose a tougher global stance, so companies do not sidestep strict American rules by taking their operations offshore.Mr. Biden held his first call with Mr. Xi on Feb. 10, in which he talked about preserving a free and open Indo-Pacific and shared concerns about Beijing’s economic and human rights practices, according to a White House readout.In a town hall-style forum broadcast by CNN on Tuesday night, Mr. Biden, who knows Mr. Xi well from meetings during the Obama administration, said he had taken a tough line on human rights and other issues during their two-hour call.“There will be repercussions for China, and he knows that,” Mr. Biden said. “What I’m doing is making clear that we, in fact, are going to continue to reassert our role as spokespersons for human rights at the U.N. and other — other agencies that have an impact on their attitude.”Mr. Biden has begun staffing his cabinet with officials who have deep experience with China. Katherine Tai, the Biden administration’s nominee for trade representative, was in charge of litigating cases against China at the World Trade Organization during the Obama administration, and has promised to take a tough line on enforcing American trade rules.President Donald J. Trump criticizing the government of China in May at the White House. Mr. Trump’s supporters credit him with taking a far more aggressive approach than his predecessors to policing China.Credit…Erin Schaff/The New York TimesMr. Biden’s top foreign policy advisers have also espoused views critical of China’s practices, though many see potential for cooperation on issues like the coronavirus pandemic and climate change. That includes Secretary of State Antony J. Blinken, Mr. Sullivan and Kurt Campbell, the National Security Council’s “Asia czar.”Ms. Raimondo, the commerce secretary nominee, will also have purview over economic relations with China, particularly those related to technology. While she had harsh words for China during her confirmation hearing, her refusal to commit to keeping Huawei on a government blacklist drew criticism from Republican lawmakers like Mr. Cruz.Treasury Secretary Janet L. Yellen, who is expected to play a pivotal role in relations with China, took a hawkish tone at her confirmation hearing last month, vowing to use the “full array” of America’s tools to combat “illegal, unfair and abusive” practices. She has also criticized China’s practices of stealing intellectual property and subsidizing state-owned enterprises, but said she did not regard Mr. Trump’s tariffs as “the proper focus” of trade policy.The new administration has given few concrete details about how it will put its strategy into practice, including whether it will implement the many China-related executive orders Mr. Trump introduced, like new restrictions on investments in Chinese companies with ties to the military and bans on Chinese-owned apps, like TikTok, WeChat and Alipay. Instead, the administration has said it would carry out a comprehensive review of Mr. Trump’s tariffs, export controls and other restrictions before making decisions.Another uncertainty is how Mr. Biden and his team will handle Mr. Trump’s initial trade deal with China given that Beijing continues to fall short of its promise to buy hundreds of billions of dollars in American products. The administration may face the choice of using the deal’s enforcement mechanisms — which include consultations and more tariffs for Chinese products — or scrapping the agreement altogether.Scott Kennedy, a senior adviser in Chinese business and economics at the Center for Strategic and International Studies, said the Biden administration had clear foreign policy goals and a large toolbox of measures at its disposal, but had not yet “figured out how to merge strategy and tactics.”On American competitiveness with China, “there’s a much larger conversation that needs to be had,” Mr. Kennedy said. “Are they going to be willing to engage in that conversation and do that thorough analysis and come up with something new? Or are they going to be fearful of political backlash and pull their punches?”Mr. Biden’s plan to engage more closely with U.S. allies to put pressure on China may also be easier said than done.In an interview in January, shortly before he left office, Robert Lighthizer, Mr. Trump’s top trade official, pointed to a recent investment agreement the European Union signed with China, against the wishes of the Biden administration, as “the first piece of evidence” that such multilateral cooperation would be difficult.Chinese officials are already strengthening ties with U.S. allies like New Zealand and South Korea in an effort “to divide and conquer,” Ms. Cutler said.China has emerged from the early stages of the pandemic emboldened, with its factories and businesses outpacing those in the United States and Europe, where the coronavirus continues to hamper the economy. While Chinese leaders are seeking to reset relations with Washington after a tumultuous period under Mr. Trump, they have continued to make sometimes hard-edge statements.In an interview with CBS News on Feb. 7, Mr. Biden said the two countries “need not have a conflict. But there’s going to be extreme competition.”“I’m not going to do it the way Trump did,” Mr. Biden added. “We’re going to focus on international rules of the road.”Alan Rappeport More

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    Chinese Solar Companies Tied to Use of Forced Labor

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyChinese Solar Companies Tied to Use of Forced LaborA new report shows some of the world’s biggest solar companies work with the Chinese government to absorb workers from Xinjiang, programs that are often seen as a red flag for forced labor.Solar panels in Clovis, Calif. Together, the solar companies named in the report supply most of the raw materials for solar panels on rooftops and utility energy projects in the United States, Europe and elsewhere.Credit…Chang W. Lee/The New York TimesAna Swanson and Jan. 8, 2021, 1:47 p.m. ETIn a flat, arid expanse of China’s far west Xinjiang region, a solar technology company welcomed laborers from a rural area 650 miles away, preparing to put them to work at GCL-Poly, the world’s second-largest maker of polysilicon.The workers, members of the region’s Uighur minority, attended a class in etiquette as they prepared for their new lives in the solar industry, which prides itself as a model of clean, responsible growth. GCL-Poly promoted the housing and training it offered its new recruits in photographs and statements to the local news media.But researchers and human rights experts say those positive images may conceal a more troubling reality — the persecution of one of China’s most vulnerable ethnic groups. According to a report by the consultancy Horizon Advisory, Xinjiang’s rising solar energy technology sector is connected to a broad program of assigned labor in China, including methods that fit well-documented patterns of forced labor.Major solar companies including GCL-Poly, East Hope Group, Daqo New Energy, Xinte Energy and Jinko Solar are named in the report as bearing signs of using some forced labor, according to Horizon Advisory, which specializes in Chinese-language research. Though many details remain unclear, those signs include accepting workers transferred with the help of the Chinese government from certain parts of Xinjiang, and having laborers undergo “military-style” training that may be aimed at instilling loyalty to China and the Communist Party.The Chinese government disputes the presence of any forced labor in its supply chains, arguing that employment is voluntary. The companies named in the report either did not respond to requests for comment or denied any role in forced labor.In a statement, a representative for the Chinese Embassy in Washington called forced labor in Xinjiang “a rumor created by a few anti-China media and organizations,” adding that all workers in Xinjiang enter into contracts in accordance with Chinese labor law. “There is no such thing as ‘forced labor,’” the representative said.The report adds to a growing list of companies that have been accused of relying on coerced labor from Uighurs and other ethnic minorities in China, either in their own factories or those of their suppliers.The United States and other governments have become increasingly vocal about forced labor in Xinjiang, including naming and shaming major corporations that operate in the region. The Trump administration has imposed sanctions on dozens of companies and individuals for their role in Xinjiang, including banning some exports from the region, which is also a major producer of cotton. On Dec. 2, it banned imports made with cotton produced by the Xinjiang Production and Construction Corps, a paramilitary group that American officials say uses forced labor.Congress is also considering sweeping legislation that would ban all products with materials from Xinjiang unless companies certify that the goods are made without forced labor.John Ullyot, the spokesman for the National Security Council, said that China’s campaign of repression in Xinjiang involved “state-sponsored forced labor” and that the United States would “not be complicit in modern day slavery.”“The administration has taken unprecedented actions to prevent China from profiting off of its horrific human rights abuses,” he said.Together, the solar companies named in the report supply more than a third of the world’s polysilicon, which is refined from rock and turned into the solar panels that end up on rooftops and utility energy projects, including those in the United States and Europe.Government announcements and news reports indicate that solar companies often take in assigned workers in batches of dozens or fewer, suggesting that the transfers are a small part of their overall work force. Still, the assertions from Horizon Advisory imply that much of the global solar supply chain may be tainted by an association with forced labor. Such charges could hurt its progressive image and risk product bans from Washington.GCL-Poly, Daqo New Energy, Xinte Energy and East Hope Group did not respond to multiple requests for comment.Ian McCaleb, a spokesman for Jinko Solar, said the company “strongly condemns the use of forced labor, and does not engage in it in its hiring practices or workplace operations.” He said that it had reviewed the claims in the Horizon report and “found that they do not demonstrate forced labor in our facilities.”Business & EconomyLatest UpdatesUpdated Jan. 7, 2021, 12:58 p.m. ETElon Musk has become the world’s richest person, as Tesla’s stock rallies.Simon & Schuster drops Senator Hawley’s book.Daimler responds: ‘We depend on a reliable and stable political framework.’China carries out a vast program of detention and surveillance of Uighurs, Kazakhs and other minorities in Xinjiang. Up to a million or more minorities may have been detained in indoctrination camps and other sites where they are forced to renounce religious bonds, and risk torture, assault and psychological trauma, Uighurs abroad and human rights groups say.The Xinjiang government has promoted the labor transfer programs in parallel with the re-education camps, efforts that have ramped up drastically under the current leader, Xi Jinping. The government has uprooted many from farms to work in factories and cities, in the belief that steady, supervised work can pull minorities out of poverty and break down cultural barriers. Workers may have little choice but to obey local officials who oversee their move to distant towns and industrial zones to fulfill government-set quotas.An internment camp in Xinjiang that local officials have portrayed as a vocational training center.Credit…Thomas Peter/ReutersThe growing scrutiny of the region has already prompted changes among some companies whose supply chains are entangled in these programs. Many textile and apparel companies that use cotton or yarn from Xinjiang have severed ties, including Patagonia, Marks and Spencer and H&M.The solar sector could face similar pressure. The industry has deep ties to Xinjiang, which accounts for about 40 percent of global polysilicon production, said Jenny Chase, the head of solar analysis at BloombergNEF. Xinjiang’s polysilicon production increased rapidly over the past decade, mostly because of cheap electricity from local coal plants and other government support, Ms. Chase said.That expansion has helped Chinese companies dominate foreign competitors, including in the United States. China produced 82 percent of global polysilicon in 2020, up from 26 percent in 2010, according to data from IHS Markit, while the U.S. share of production shrunk to 5 percent from 35 percent.“I am concerned that forced labor may have been used in Xinjiang,” said Francine Sullivan, the vice president for business development at REC Silicon, a Norwegian polysilicon manufacturer with operations in the United States. The company shut a facility in Washington State, despite surging overall U.S. demand.Xinjiang is known for low safety and environmental standards, Ms. Sullivan said, and forced labor “may be just part of the incentive package.”Xiaojing Sun, a senior research analyst at Wood Mackenzie, said solar companies were starting to investigate their exposure to Xinjiang and reconfigure their supply chains to avoid the region if possible.In a note to investors in October, analysts at Roth Capital Partners said the solar sector faced a “heightened risk of disruption” because of its ties to Xinjiang.“Investors are getting nervous,” Ms. Sun said.The Solar Energy Industries Association, the largest industry association in the United States, has called human rights abuses in Xinjiang “reprehensible” and strongly encouraged companies “to immediately move their supply chains out of the region.”Since unfettered on-the-ground access to Xinjiang for foreign journalists and researchers is virtually impossible, the Horizon Advisory researchers do not provide direct testimony of forced labor. Instead, they present signs of possible coercion from Chinese-language documents and news reports, such as programs that may use high-pressure recruitment techniques, indoctrinate workers with patriotic or military education, or restrict their movement.The report documents GCL-Poly accepting “surplus labor” from a rural region of Xinjiang last year. In 2018, according to an article on China Energy Net, a local news site, one of GCL-Poly’s subsidiaries also accepted more than 60 such workers.A local subsidiary of Jinko Solar, Xinjiang Jinko Energy Co., received state subsidies for employing local Xinjiang labor, including at least 40 “poor workers from southern Xinjiang” in May, according to a local government announcement from July 2020 cited by Horizon Advisory.On its public WeChat account, East Hope Group said that it had “responded to the national Western Development Call and actively participated in the development and construction of Xinjiang,” including constructing a polysilicon project in Changji prefecture in 2016, the Horizon report said.That same year, according to a Chinese news report cited by Horizon, Xinjiang’s Yarkand County signed a “labor export cooperation framework agreement” with a subsidiary named East Hope Group Xinjiang Aluminum Company.Another subsidiary of East Hope, Xinjiang East Hope Nonferrous Metals Co., “accepted 235 ethnic minority employees from southern Xinjiang,” who were given training to make up for “low educational qualifications, weak national language skills and insufficient job skills,” according to a report on the company’s website.According to Horizon Advisory, several solar companies also have ties to the Xinjiang Production and Construction Corps, which has been penalized by the Trump administration. In its 2018 financial report, Daqo New Energy said its Xinjiang facilities benefited from a lower cost of electricity because the regional grid is operated by a division of the Xinjiang Production and Construction Corps.Amy Lehr, the director of the Human Rights Initiative at the Center for Strategic and International Studies, said that work programs that draw on Xinjiang minorities and offer companies subsidies for employing them are a “red flag” for forced labor.These programs may restrict workers from quitting, traveling or participating in religious services, pay less than minimum wage, and involve harsh or unsafe work conditions, as well as the threat of detention, according to Ms. Lehr’s research.“The concern is that there is a potential for coercion, because of the level of surveillance and fearfulness,” Ms. Lehr said. Companies that source products from the region have “no way of knowing that you’re not being connected to forced labor,” she said.Nathan Picarsic, a founder of Horizon Advisory, said what the firm had documented was likely “just the tip of the iceberg.” If Americans are buying solar panels made with materials from these Chinese companies, he said, “I would say you are complicit in perpetuating this Chinese industrial policy that suppresses and disenfranchises human beings.”AdvertisementContinue reading the main story More

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    Here Are The 8 Chinese Apps Trump Banned

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyTrump Bans Alipay and 7 Other Chinese AppsThe White House took a surprise parting shot at China on Tuesday by banning the popular Chinese payment service and other applications.An executive order signed by President Trump on Tuesday banned the payment apps Alipay and WeChat Pay.Credit…Greg Baker/Agence France-Presse — Getty ImagesJan. 5, 2021, 6:43 p.m. ETWASHINGTON — President Trump on Tuesday signed an executive order prohibiting transactions with eight Chinese software applications, including Alipay, the payment platform owned by Ant Group, and WeChat Pay, which is owned by Tencent.The move, two weeks before the end of Mr. Trump’s term, could help lock in his administration’s harsher stance toward China and is likely to further rankle Beijing.The executive order, issued late Tuesday, will bar any transactions with “persons that develop or control” the apps of Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office and their subsidiaries after a period of 45 days.In the order, the president said that “the pace and pervasiveness of the spread in the United States of certain connected mobile and desktop applications and other software developed or controlled by persons in the People’s Republic of China” continued to threaten American national security. “At this time, action must be taken to address the threat posed by these Chinese connected software applications,” he wrote.The Trump administration has ramped up tariffs and waged a trade war against China in recent years. It has also targeted Chinese-owned social media services, saying they provide a conduit for Chinese espionage and pose a national security risk to the American public. Last fall, the Trump administration issued executive orders banning two other popular Chinese-owned social media services, TikTok and WeChat.But both of those bans have become entangled in litigation, and the services continue to operate in the United States. That raises the question of whether American courts will issue an injunction to stop Mr. Trump’s latest bans on Chinese services as well.In a statement, Wilbur Ross, the commerce secretary, said he had directed his department to begin enacting the orders, “including identifying prohibited transactions related to certain Chinese connected software applications.”“I stand with President Trump’s commitment to protecting the privacy and security of Americans from threats posed by the Chinese Communist Party,” he added.The incoming Biden administration has not clarified whether it will continue to try to enforce Mr. Trump’s bans. Reuters earlier reported the signing.This is a developing story. Check back for updates.AdvertisementContinue reading the main story More

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    U.S. Companies to Face China Tariffs as Exclusions Expire

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyU.S. Companies to Face China Tariffs as Exclusions ExpireMany American companies could see their exemptions from President Trump’s China tariffs expire at midnight on Thursday.The Port of Oakland this month. Companies will have to again pay a tax to the government to import a variety of goods from China as the bulk of tariff exclusions are set to expire at midnight on Thursday.Credit…Jim Wilson/The New York TimesDec. 31, 2020, 5:00 a.m. ETWASHINGTON — American companies are facing the prospect of higher taxes on some of the products they import from China, as the tariff exclusions that had shielded many businesses from President Trump’s trade war are set to expire at midnight on Thursday.Mr. Trump began placing tariffs on more than $360 billion of Chinese goods in 2018, prompting thousands of companies to ask the administration for temporary waivers excluding them from the levies. Companies that met certain requirements were given a pass on paying the taxes, which range from 7.5 percent to 25 percent. Those included firms that import electric motors, microscopes, salad spinners, thermostats, breast pumps, ball bearings, fork lifts and other products.But the bulk of those exclusions, which could amount to billions in revenue for businesses based in the United States, are set to automatically expire at midnight on Thursday. After that, many companies will have to again pay a tax to the government to import a variety of goods from China, including textiles, industrial components and other assorted products.The Trump administration could still extend the exclusions, but has not given any indication of whether it will, leaving many companies in limbo. The Office of the United States Trade Representative did not respond to requests for comment about the exclusions.The United States has announced some extensions — on Dec. 23, the trade representative announced that it would extend exclusions until March 31 for a small category of medical care products, including hand sanitizer, masks and medical devices, to help with the battle against the coronavirus pandemic.But Ben Bidwell, the director of U.S. customs at the freight forwarder C.H. Robinson, who has been helping clients apply for exclusions, said that “the large majority” of those that had been granted would expire at the end of the year, leaving importers with either an additional 7.5 percent or 25 percent tariff, depending on their product.The United States trade representative had been “rather silent about any type of extension,” Mr. Bidwell said.Lawmakers have lobbied the administration to extend the waivers. On Dec. 11, more than 70 members of Congress, including Representative Jackie Walorski, a Republican from Indiana, and Ron Kind, a Democrat from Wisconsin, sent a letter urging Robert E. Lighthizer, the United States trade representative, to extend all of the active exclusions to help businesses that have been hurt by the pandemic.“Our economy remains in a fragile state due to the ongoing Covid-19 pandemic,” the letter states. “Extending these exclusions will provide needed certainty for employers and help save jobs.”Mr. Trump has wielded tariffs to protect some American industries from foreign competition and encourage others to move their supply chains from China. The tariffs have partly accomplished those goals, though most companies have moved operations to other low-cost countries like Vietnam or Mexico, rather than the United States.The Coronavirus Outbreak More