[Biden Era] From Large Nail to Awl... China Facing New Pressure

Biden Emphasizes Alliance Unity... Burden from China-EU CAI Deal
US Deploys Foreign Trade Experts... More Sophisticated Response
Asia Expert Kurt Campbell Appointed Indo-Pacific Coordinator

[Asia Economy New York=Special Correspondent Baek Jong-min] The inauguration of the Joe Biden administration signifies a complete overhaul of the foundations of U.S. diplomacy and trade policy. Unlike President Donald Trump, who appointed businessmen, politicians, and military personnel to diplomatic and trade positions, the Biden administration has deployed seasoned professional bureaucrats who have long built expertise in these fields. Some predict that U.S.-China relations will become a "Season 2 of the Barack Obama administration." However, considering changes in the international situation such as China's rapid rise, the prevailing view is that China policy may take a new direction.

◇Surrounding China with Allies? ... European Cooperation is Key

President-elect Biden is an expert in foreign and security affairs. The U.S. political circles expect him to focus more on foreign and security issues than domestic affairs.

Biden has already stated his intention to maintain trade tariffs on China for the time being. He also mentioned that he would review the Phase One trade agreement reached between the two countries last year. Under the U.S.-China Phase One trade deal, China agreed to purchase $200 billion worth of U.S. goods by this year, but the likelihood of achieving this is considered low. Negotiations on the Phase Two trade agreement, which includes intellectual property (IP) rights, have not even begun. Given that the Democratic Party traditionally emphasizes IP and that human rights issues triggered by the Hong Kong Security Law are added, it is widely assessed that the Biden administration's China policy is likely to take a tough stance.

Unlike President Trump, Biden intends to act together with allies. In an interview with The New York Times, Biden said, "The best China strategy is to work together not only with current allies but also with countries that were allies in the past."

However, it is questionable whether such a policy will be effective. Ahead of the Biden administration's inauguration, China signed the Comprehensive Agreement on Investment (CAI) with the European Union (EU). This means the plan to surround China with allies has been disrupted from the start. While the U.S. has expressed its intention to push for alliance cohesion to pressure China, the EU, which comprises most of America's allies, has moved forward with cooperation with China, contrary to U.S. expectations, posing a burden for the new U.S. government.

◇No Reckless Pressure Expected

Biden's appointments in diplomacy and trade suggest a return to a carefully designed response and diplomatic negotiations rather than a reckless approach toward China.

A representative example is Kurt Campbell, the former Deputy Assistant Secretary of State for East Asia and Pacific, who will serve as the White House National Security Council (NSC) Indo-Pacific Coordinator. The newly established Indo-Pacific Coordinator position in the Biden administration will be responsible for responding to the threat posed by China. This appointment is seen as a complement to Jake Sullivan, the NSC advisor nominee, who has limited experience in Asian affairs.

The Washington Post reported growing expectations that Campbell is better equipped to handle China than during the Obama administration. He possesses extensive knowledge and practical experience regarding China and the Asia region, and maintains good relations with Congress, leading to analyses that he will lead the administration's China policy. Campbell designed the "Pivot to Asia" strategy during the Obama administration. This can also be interpreted as his preparation of a better policy considering recent changes. The Pivot to Asia aimed to promote cooperation with Asia, especially China, on various issues ranging from climate change response to U.S.-led regional security. It sought to stimulate economic growth through expanded trade and investment with an open China but lost significance amid the change of administration.

Campbell provided hints on how to handle China in a Foreign Affairs article. In a co-authored piece titled "How Can the U.S. Strengthen the Asian Order?" he advocated for tailored coalitions rather than a massive alliance focused on containing China and expressed support for the D10 concept proposed by the UK. The D10 refers to the Group of Seven (G7) countries plus South Korea, Australia, and India.

◇Overcoming COVID-19 Comes First, New Trade Agreements Later

The Biden administration's new trade agreements are not expected to appear early. Since rebuilding the U.S. economy, which has been worsened by the COVID-19 pandemic, is a priority, international trade responses will be lower on the agenda.

Biden has differentiated himself from President Trump, who championed "America First," by promoting "Buy American." The presidential transition team has specified this as "made in all of America, by all of America’s people." CNBC evaluated that Biden aims to redesign trade relations with China to align with his Buy American pledge. Accordingly, the Biden administration is expected to actively pursue policies encouraging the return of manufacturing to the United States.