1489313 - Hogan Lovells FIS Horizons 2021 update - Flipbook - Page 9
Financial Institutions Horizons
9
Biden’s China policy: No details, but several
clues on approach
When Mr. Joseph Biden takes office on 20 January 2021, he will be a seasoned foreign
policy hand facing a new, challenging landscape in U.S.-China relations. His policymaking process will be a return to the familiar – working with allies, renewing U.S.
leadership in multilateral institutions, and dogged classical diplomacy at all levels –
but he faces a changed bilateral relationship that will make abrupt shifts to existing
policies hard to pursue or enact. He will also face bipartisan domestic pressure to take
stronger actions against China. As a result, the U.S.-China relationship is likely to
remain contentious. However, the return to traditional policy-making means financial
institutions and other companies will have more ways to influence policy and navigate
what will continue to be a challenging regulatory environment.
During his presidential campaign, Mr. Biden
largely avoided direct skirmishes with the Trump
Administration on China policy, knowing that
the muscular approach under President Trump
towards China is popular in political battleground
states and on both sides of the aisle on Capitol
Hill. Instead, he criticized President Trump for
not being strong enough on China and for his
scattershot approach to tariffs. Still, he declined
to specify how his potential future Administration
would approach the relationship differently,
apart from working more closely with U.S. allies.
Mr. Biden benefited from this approach politically,
as it kept the focus on the domestic issues of
the pandemic response and lagging economy,
two areas that were winners for his campaign.
But this tactic leaves the business community
wondering how, precisely, Mr. Biden will
approach the U.S.-China relationship and
how they should respond.
An incoming Biden Administration will be
under pressure to maintain a foreign policy
that confronts China on national security and
trade matters. As such, it is unlikely that a Biden
Administration will make significant shifts in
current U.S. policies towards China, at least in
the first few months of 2021. Any effort to roll
back the Section 301 tariffs on Chinese goods,
for example, would require a quid pro quo
from China, which would then likely involve at
least some effort to deal with difficult systemic
issues that were mostly put aside in President
Trump’s “Phase One” deal. Similarly, some Biden
(campaign? Future Administration?) foreign
policy advisors have called for an effort to work
with China on climate change, but it is not clear
how much can be achieved in terms of substantive
changes in Chinese domestic policies. Much like
President Trump, who found himself flanked on
either side by China hawks and doves, urging him
to go further or cautioning him against going too
far, Mr. Biden may also find himself stuck between
wanting to have a more collaborative relationship
with China and needing to take decisive action
to address unfair trade practices and national
security concerns.
