Blinken’s visit to China, the Communist Party’s tone softens, experts analyze.

The US Secretary of State, Blinken, is scheduled to visit Beijing next week, while the Biden administration is implementing multiple measures to counter the Chinese Communist Party (CCP). Experts analyze that the US is using a combination of pressure and incentives towards the CCP, with the CCP’s counter-sanctions being largely symbolic.

Compared to the strong rhetoric of the CCP during the high-level US-China exchanges last year, where they stated the responsibility for the poor US-China relationship was clear, this year the Chinese Ministry of Foreign Affairs welcomed the visit of Secretary Blinken, indicating a significant shift in tone.

Observers note that the US is well-prepared this time. At the Group of Seven (G7) foreign ministers meeting held in Italy on Thursday (April 18), the US accused Beijing of assisting Russia in its military expansion and rebuilding Russian defense industry bases. Beijing’s support for Russia will be one of the topics during Blinken’s visit to China.

Ye Yaoyuan, a professor at St. Thomas University’s International Studies Lecture, stated in an interview with Dajiyuan that he predicts there will be three key points in Blinken’s visit:

Firstly, similar to the purpose of the previous visits by Yellen and Blinken, the current economic situation in China is weakening. Will China be willing to embark on a new round of economic cooperation with the US? However, the cooperation the US seeks is fair, open, and based on free market competition. Will China be willing to commit to that?

Secondly, tensions are high in the Middle East, and China has close ties with Iran. Therefore, the US will communicate with China to determine if there is a way to work towards peace in the Middle East. From the perspective of the CCP, a turbulent world works to its advantage, so while they may speak positively, their actions may not align.

Thirdly, the conflict in the Russia-Ukraine war, as well as the tensions in North Korea, and conflicts between the South China Sea and the Philippines may also be discussed, contributing to regional security instability.

Apart from these, there may be progress on topics discussed during the Biden-Xi summit last year, including whether there is normal communication in the military channels and if there is genuine cooperation in combating fentanyl.

Zheng Xuguang, a political economist, noted in an interview with Dajiyuan that the challenges Blinken brings up are significant, particularly the focus on Beijing’s support for the Russian defense industry, given the intense situation on the Russia-Ukraine front, with Ukraine being in a critical situation.

On April 11th, US European Command Commander Christopher Cavoli testified at a House Armed Services Committee hearing, stating that if Ukraine is not supported, they will run out of ammunition and air defense interceptors in a short time.

Voice of America reported that in 2023, about 90% of Russia’s microelectronic products came from China. These components are crucial for Russia in manufacturing missiles, tanks, and fighter jets. US Department of Defense spokesperson Pat Ryder confirmed on April 15 that China provided a large number of mechanical tools, microelectronics, optics, drones, and cruise missile technologies for manufacturing weapons propulsion agents to help Russia enhance its defense production.

Zheng Xuguang believes that the prospect of China and Russia forming an alliance is terrifying because Russia does not lack food or resources, which China lacks. China’s industrial overcapacity perfectly complements Russia and with the two countries bordering each other, making transportation convenient, there is potential for a mutually beneficial relationship. From the US perspective, efforts would need to be made to dismantle this alliance.

“It is obvious that Ukraine has support from the entire world, while Russia is being sanctioned by the Western world. Without China’s support, Russia would struggle to sustain its wartime economy. Not only has China helped restore the foundation of Russia’s defense industry, but there has also been a substantial influx of civilian goods, allowing resources to be shifted from civilian to military sectors. It is crucial to reduce China’s support to Ukraine to prevent Ukraine’s war efforts from being passive,” he said.

Prior to Blinken’s visit to Beijing, the Biden administration had implemented several tough measures, such as sanctioning Beijing for buying Iranian oil; imposing high tariffs on Chinese steel and aluminum products; accusing Beijing of aiding Russia in revitalizing its defense industry and sanctioning Chinese technology companies; naming China’s oversupply in new energy vehicles, lithium batteries, and photovoltaic capacity; urging the Netherlands and Japan to strengthen export controls on semiconductor equipment and materials to China; initiating a 301 investigation on China’s shipping, logistics, and shipbuilding industries, among others.

Ye Yaoyuan believes that these measures will certainly be effective in curtailing China’s economic influence since they are tangible actions. Chinese exports to the US are naturally decreasing, which will have a definite impact on China’s economy. However, the political effects on China may not be as comprehensive as the focus is on specific industries, leaving China with other alternatives. Trump had proposed a different concept by imposing tariffs up to 60%, which would have been a more comprehensive and severe sanction, potentially more challenging for China to handle.

Zheng Xuguang believes that the US measures contain both tough and soft strategies. For instance, intensifying tech sanctions, which is a new productive force that Xi Jinping highly values, is essential. China urgently needs some leeway given by the US, as being overly restrictive could cause issues.

“Nowadays, the domestic economy is dependent on exports, opening up manufacturing. China needs to attract foreign investment and increase exports to boost domestic demand. If China’s lagging production capacity cannot be offloaded to the world, it means that large-scale investments and loans to manufacturing since last year must be nullified. Many would potentially go bankrupt as without the global market, they can only rely on Chinese consumption. In such a scenario, numerous manufacturing operations would have to shut down to remain profitable, as otherwise, everyone would be losing money. Therefore, if emerging countries and Europe and America refuse to accept Chinese products, engaging in a high tariff war, Xi Jinping won’t be able to handle it, and Li Keqiang might consider jumping out of the window,” he said.

Regarding the expectations for Blinken’s visit, Zheng Xuguang believes it depends on how resolute the US is. What are your chips? If you say there will be consequences, then Blinken needs to convey that message – what will these consequences be?

“For example, how high will tariffs be increased, what will the sanction list look like, or even what sanctions will be imposed on Beijing? However, if Beijing changes its ways and gradually reduces its support for the Russian military industry, specifying how many stages this reduction will occur, decreasing support to a manageable level, then the US might postpone sanctions or even offer many exemptions during the 301 investigation. There are many such behind-the-scenes deals to be made; you (the US) need both the stick and the carrot (the CCP) to pay attention,” he said.

Chinese media analysts also suggest that the US is in need of China. Blinken’s visit is aimed at preventing China from abandoning US bonds, as the high 5.5% interest rate in the US is leading towards collapse. The US faces the possibility of countries worldwide abandoning US bonds if interest rates are lowered, hoping that China continues to lead in purchasing US bonds. China has reduced its holdings of US bonds for the second consecutive month.

Ye Yaoyuan believes this is a diversionary tactic. A substantial amount of US bonds are held by the Chinese government, seemingly giving China leverage over the US. However, the US must pay interest on Chinese bonds, and they can afford it. Interestingly, regardless of Yellen and Blinken’s visit to China, no one has discussed US bonds. It is merely a topic discussed by the CCP. In reality, the US does not care about the amount of national debt.

Zheng Xuguang also believes that China and Japan are the two biggest holders of US bonds, but their impact on US bonds is marginal and not decisive. Furthermore, even if the US bond market were to expand, China would not be able to sustain it.

“Looking at the US financial system with any country’s perspective is incorrect. Because the Federal Reserve is essentially the central bank of central banks, it is the central bank of the world; it’s that simple. So how can it collapse? Saying that the US is no longer feasible is a ‘politically correct’ notion in China,” he said.

Some Chinese media perspectives suggest that China may launch countermeasures against the US, creating a new “trade battlefield” between the two largest economies in the world. For example, levying anti-subsidy taxes on US companies.

Zheng Xuguang states that the CCP’s sanctions are largely symbolic. “During the first trade war, there were handicrafts listed in the Chinese sanction list against the US, perhaps special crafts made by Native Americans exported to China. You can see it didn’t make a big impact; it mainly serves as a formal equivalent or saving face. Certainly, if you don’t study carefully, you would think the CCP has taken a tough stance, but upon closer examination, you would see they are rather constrained and must respond, but there isn’t much they can sanction. How can a manufacturer sanction a customer? This is a somewhat tricky situation.”

While the CCP launches offensives in public opinion, they also paint the US-China relationship as a “rainbow after the rain.” Earlier, Chinese Vice Premier He Lifeng, during a meeting with Yellen, spoke about encountering thunderstorm weather while flying to Guangzhou and said, “After the rain, you will see a rainbow,” symbolizing that the US-China relationship, particularly in terms of trade, might improve.

Ye Yaoyuan believes that the CCP hopes the US-China relationship can be a rainbow after the rain, but the US perception of the US-China relationship has shifted drastically; previously aiming for a “shared future,” it has transitioned to seeing each other as competitors, a realistic perspective. The CCP also views the situation similarly, with anti-American sentiment escalating.

It should come back to the international system and determine the role each country plays. What role do these two countries exactly hold?

“Primarily, the US has established the Indo-Pacific strategic zone, and as its relations with India and Vietnam further improve, China is left with only Central Asia and Russia as allies in its surroundings. The US is a maritime power; it will certainly blockade China along its maritime borders,” he says.

Zheng Xuguang believes that the US-China relationship will not improve; it will only worsen over time. There might be temporary stability, like when they hit rock bottom after the spy balloon incident and the climax during the Biden-Xi meeting in San Francisco last year, representing a brief hot spot. Currently, the US-China relationship, especially in key diplomatic and military areas, is colder than the US-Soviet cold war. The central issue lies in the lack of communication channels in those fundamental areas – it isn’t about how much trade occurs; the crucial factors are in the military and diplomatic relationships without basic communication channels.

Editor: Sun Yun#