Washington Doesn’t Want You to Call It Decoupling

The United States wants to de-risk and diversify its relationship with China, not decouple, U.S. National Security Advisor Jake Sullivan said Thursday, in the Biden administration’s latest effort to define its economic approach toward China and reassure European allies that have grown wary of the increasingly hawkish U.S. position.

Since taking office more than two years ago, the Biden administration has unleashed a spate of moves targeting China’s technology sector, including by ramping up semiconductor export controls and effectively blacklisting dozens of Chinese companies by adding them to the U.S. Commerce Department’s Entity List, which requires these firms to secure a special license to purchase U.S. technologies. Concerned about supply chain vulnerabilities, Washington has also intensified efforts to carve out new critical mineral supplies that fall outside Beijing’s orbit.

In his speech at the Washington-based Brookings Institution on Thursday, Sullivan stressed that these moves were motivated by “straightforward” national security concerns, designed to hit only the most high-level, advanced forms of technology exports. The Biden administration is seeking to “manage competition responsibly” and cooperate when possible in areas such as food security and the climate, he added.

“Our export controls will remain narrowly focused on technology that could tilt the military balance,” Sullivan said. “We are simply ensuring that U.S. and allied technology is not used against us. We are not cutting off trade.”

Sullivan’s speech is just the latest incarnation of Washington’s efforts to learn how to wield economic statecraft more effectively, an initiative that his former boss, then-Secretary of State Hillary Clinton, put front and center during her time at the State Department. China has used its economic heft to cow neighbors and curry influence around the world; the United States in recent years has taken steps, such as with more robust development financing, to play a similar game. The stress on economic competition with, if not decoupling from, China is part and parcel of an effort to use all levers of U.S. policy to prevail in what looms as the biggest strategic showdown of the early 21st century.

Still, Washington’s allies, particularly in Europe, have gotten nervous about the bellicose economic talk. Within the European Union, leaders have splintered over how to craft their China policy, most recently with French President Emmanuel Macron urging Europe not to become Washington’s “followers” in relations with Beijing. European Commission President Ursula von der Leyen has consistently pushed to de-risk the relationship with—not decouple from—China. Sullivan echoed this language in his speech, even explicitly nodding to von der Leyen at one point.

“The speech was replete with support for the EU position,” tweeted Emily Benson, an expert on trade at the Center for Strategic and International Studies (CSIS). “This reflects a clear intention to reaffirm the transatlantic relationship. The transatlantic alliance is strong and only getting stronger.”

In his speech, Sullivan also melded together several themes of the diaphanous Biden foreign policy into one: policies that work for the middle class but that also work for poorer countries and contribute to the fight against climate change. He also threw in a paean to industrial policy for good measure.

“The world needs an international economic system that works for our wage earners, works for our industries, works for our climate, works for our national security, and works for the world’s poorest and most vulnerable countries,” Sullivan said. “That means replacing a singular approach focused on the oversimplified assumptions … with one that encourages targeted, necessary investments in places the private markets are ill-suited to address on their own.”

Sullivan’s remarks follow U.S. Treasury Secretary Janet Yellen’s speech last week, in which she declared that Washington will prioritize national security concerns in its relationship with China, even if it comes at an economic cost. In her statements, she stressed that the United States is focused on defending its security interests—not securing a competitive advantage or suppressing Beijing’s own modernization. Together, she added, the countries should forge “healthy” economic ties.

“China’s economic growth need not be incompatible with U.S. economic leadership,” she said, later adding: “We do not seek to ‘decouple’ our economy from China’s. A full separation of our economies would be disastrous for both countries.”

The double-barreled administration messaging is likely motivated by those concerns from U.S. allies, said David Dollar, a senior fellow at Brookings. “I think a lot of the impetus is what we’re hearing from our partners,” Dollar said. “Many of them share our concerns about national security, but they don’t want to see radical decoupling on the economic front.”

Given the scope of U.S. economic measures against China, which threaten the country’s high-tech industries, the administration is likely trying to put a more positive spin on what still feels, to many U.S. allies (and China), like the same sort of anti-China animus that motivated much of the Trump administration’s policy toward Beijing.

“I think they recognize that the tensions between [the] two countries are getting worse and worse, so there is an effort to cast the administration’s position in a much more positive or constructive viewpoint,” said Yukon Huang, a senior fellow at the Carnegie Endowment for International Peace.

Whether Sullivan’s and Yellen’s reassuring words will be followed by concrete actions, though, remains to be seen. U.S. efforts to reduce dependency on Chinese-dominated supply chains, for example, will inevitably involve some degree of separation of the two economies. Likewise, tech investment that used to flow from Silicon Valley to China has dried up in recent years, driven in part by Washington’s more hawkish policies.

“It’s very difficult to know whether [Yellen’s] speech represents a shift in an overall administration policy, a difference of opinion within the administration, or a maintenance of its original broad-brush approach but just wrapped inside a more appealing-sounding tone,” said Scott Kennedy, an expert on Chinese business and economics at CSIS.