Trade War
Welcome to the 150th edition of Trade War.
Suspected Chinese spy balloon discovered near Montana missile silos, drifts across the U.S. and Biden orders it shot down. Beijing calls it a wayward civilian aircraft, expresses its “strong dissatisfaction” and accuses Washington of “overreacting.” Secretary of State Blinken visit postponed as US-China relations drop to near an all time low.
Washington mulls broader limits on American investment in China tech beyond semiconductors. Foreign trade and investment outlook called “severe” by Beijing. And consumer confidence and service sector rebound but don’t expect this Chinese economic recovery to look like earlier ones.
Chinese espionage over Montana?
“The Chinese spy balloon drifting over Montana caught my attention—Montana is my home state, and I teach Chinese politics here through the Mansfield Center at the University of Montana—but the reality is there are a lot of other equally serious challenges to the fraught US-China relationship that made a [U.S. secretary of state Antony Blinken] visit to Beijing already very problematic,” says the author of Trade War, who is also a senior fellow at the Indo-Pacific Security Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security.
“Among those are disagreements between the two countries over human rights, China’s mercantilist trade practices, its economic support for Russia, and the future of Taiwan. But what is likely front and center right now is the ongoing battle over who will lead in the development of advanced technology such as artificial intelligence, quantum computing, and semiconductors.”
“The news that Washington may impose new restrictions on sales of US technology to Huawei is just the latest salvo among many that the Biden administration has taken to block China’s technological rise, including most recently convincing the Netherlands and Japan to ban the sale to China of machinery to make advanced semiconductors.”
US-China relations at a “near all time low"
“The relationship has been at a probably near all time low,” I say in an interview with Canadian broadcaster CBC.
“I think there was some hope that the visit, now cancelled or delayed, by secretary of state Blinken to Beijing could at least put a floor under that falling relationship. Now of course that visit is not happening, at least not for the time being. So I think that is a real cause for concern in the U.S.-China relationship.”
Defending MT from “hostile adversaries like China”
“If China wants to spy on the U.S., and particularly look at military capability, well, they should look at Montana. And it appears that’s what they were doing,” Dexter Roberts, a senior fellow at the Mansfield Center at the University of Montana, said to the Daily Montanan’s Keila Szpaller, for an article published before the balloon was shot down.
Malstrom Air Force Base in Great Falls, MT, one of just three nuclear missile silo bases in the U.S., has 150 intercontinental ballistic missiles (ICBM’s) along with 3,324 military personnel and 548 civilian personnel.
“This is not the first time a Chinese balloon has entered American airspace over sensitive national security areas—I don’t think anyone believes this was merely a civilian aircraft,” said Montana Republican U.S. Senator Steve Daines, who earlier worked in China. “This is why I’m asking for a full security briefing from the Pentagon. Balloons don’t just enter our airspace haphazardly.”
“This provocation is completely unacceptable, and I am in close contact with Department of Defense and Intelligence officials,” said Montana U.S. Senator Jon Tester, a Democrat, and chairman of the Defense Appropriations Subcommittee. “I will always defend Montana and our national security from hostile adversaries like China.”
Added Montana U.S. Representative Ryan Zinke, a Republican: “Shoot. It. Down.“ Montanan’s “do not bow.”
“I think that we all need to be mindful of the fact that the relationship continues to deteriorate between the two countries, and that’s a problem,” said Roberts, also a senior fellow at the Atlantic Council. “We’re very entwined,” Roberts said, pointing to the fact that many of America’s largest companies are deeply reliant on the China market, as are global technology supply chains.
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