31.08.2023 | The Politics of Raimondo’s China Trip
by Derek Scissors - AEI

Someone is being politically naïve about semiconductor export controls. It may be me or, much more important, it may be Secretary of Commerce Gina Raimondo. I thought the Secretary’s trip to Beijing the past few days meant that the licenses to sell semiconductors to the PRC would not be renewed. Because who goes to Beijing, then comes back to announce a vital decision that helps China? Certainly not anyone with political aspirations.

The Secretary’s trip itself is nearly meaningless. Clearing a low bar, China’s economy is healthier than last year. There’s no meltdown coming because the financial system is not commercial. Possible credit freeze? Beijing orders up more. Externally, China raises the average of world growth, often at others’ expense. The primary effect is driving other countries’ producers out of business. Whether its growth helps or harms depends on oversupply, not simple GDP.

Excess capacity and China’s other economic problems are long-term and deeply rooted. Minor agreements or disagreements with the US don’t make a bit of difference. What matters will happen after Secretary Raimondo’s return. Putting aside, for now, the commercial impact of the final export control rule and any license exceptions, the politics are pretty clear.

The interim export control rule applied to semiconductors last October is the most important economic action the Biden administration has taken with respect to China. But the Department of Commerce will apparently extend licenses granted to three foreign companies to sell chips freely to the PRC. License extensions are gutting the rule, leaving China able to buy as it wants. The rule’s impact is just diversion of business to lucky firms.

The administration’s key China economic choice being in Secretary Raimondo’s hands seems like a replay of Treasury Secretary Yellen’s trip to Beijing and the near-useless executive order on outbound investment. But there was no interim rule for outbound investment to make it appear something important might actually get done. With semiconductor exports, there is. The stakes are mildly higher for Secretary Raimondo in that way.

The stakes are much higher in another way. It’s widely thought Secretary Raimondo may want to run for President in 2028. This decision is like handing her future opponents a baseball bat and telling them to swing for the (low) fences. Have a big decision to make, don’t make it for months and months, go to Beijing, come back, and make the decision China wants? The 2027 attack ad writes itself.

The Secretary could be gambling on Republicans being terrible on China. Communist Party General Secretary Xi Jinping almost immediately broke the phase one trade agreement with former President Trump and lies about an epidemic that killed over one million Americans, yet Trump keeps praising him. The Biden administration’s “competition” with China is turning farcical, but likely Republican nominee Trump has no credibility when he says he won’t bend the knee to Xi. Again.

Still, Republicans have five years before 2028 to craft better policies. If Secretary Raimondo does run for President and faces anyone, Republican or Democrat, with a decent China platform, her Beijing visit could prove much more consequential than it has any right to be. Because she may make sure we’ll be hearing about it, again and again.


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