Washington Update

In his State of the Union address last night, President Joe Biden highlighted his administration’s approach to industrial policy and competition with China. Early in his speech, he praised the CHIPS and Science Act for spurring increased domestic private-sector investment in semiconductors.

On Wednesday, President Joe Biden issued a long-anticipated data executive order (EO) that directs the Justice Department (DOJ) to establish regulations limiting the transfer of sensitive US personal data to countries of concern, including China.

During a speech at the Munich Security Conference last week, FBI Director Christopher Wray outlined his concerns about the threat posed by China’s hacking program, which Wray described as larger than that of every other major nation combined. The topic later received attention on Capitol Hill, partly in response to President Joe Biden’s re-election campaign launching a new TikTok account.

Last weekend, Chair of the Select Committee on the CCP Mike Gallagher (R-WI) announced that he is not running for reelection. His retirement from Congress surprised many, as the young congressman was considered a rising star, particularly on foreign policy.

On Monday and Tuesday, a delegation from the US Treasury Department, led by Under Secretary for International Affairs Jay Shambaugh, traveled to Beijing for the third meeting of the two countries’ recently established Economic Working Group. It was the working group’s first meeting in 2024 and its first in-person meeting in China.

Last Friday through Saturday, National Security Advisor Jake Sullivan met with Chinese Foreign Minister Wang Yi to broker details on several areas of US-China cooperation agreed upon by President Joe Biden and President Xi Jinping late last year. Sullivan and Wang discussed recent efforts, such as officially resuming military-to-military dialogue between the United States and China earlier this month, and plans for the future, including the possibility of hosting a US-China dialogue focused on AI.

The House Select Committee on the CCP is pushing for tougher enforcement of the US ban on imports from China’s Xinjiang province. Committee leadership has called for expanding screening measures, adding more Chinese firms to a forced labor blacklist, and lowering the de minimis threshold.

During a Wednesday hearing on US capital flows to China, the House Foreign Affairs Committee (HFAC) outlined its favored approach to regulating outbound investment: The Preventing Adversaries from Developing Critical Capabilities Act. The bill is similar to the executive order (EO) on outbound investment that President Joe Biden signed last summer, as it takes a sectoral approach to screening outbound investment.

In a letter first publicly released on Monday, Chair of the Select Committee on the CCP Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL) urged Commerce Secretary Gina Raimondo and US Trade Representative Katherine Tai to “utilize all existing trade authorities” to address potential actions by China that distort the market for older-generation microchips.

Last week, the Office of the United States Trade Representative (USTR) further extended tariff exclusions for 77 COVID-19 related goods and 352 non-medical products from China until May 31, 2024. The exclusions were set to expire at the end of 2023 and cover a range of products from masks and gloves to industrial components and bicycles.