US-China relationship remains ‘competitive’, as steps towards diplomacy strengthen

The United States has described efforts to improve bilateral relations with China as a work in progress amid calls from a Chinese official against any decoupling between the two economic giants. 

The US has and will continue to advance its interests while believing that competition with China does not have to lead to conflict or confrontation, said US national security advisor Jake Sullivan at a media briefing on Thursday in Beijing, China. The US government official is in the Chinese capital this week for a three-day visit that included a meeting with President Xi Jinping. 

“The US will continue to take necessary action to prevent advanced US technologies from being used to undermine our national security without unduly limiting trade or investment,” Sullivan said. “We have continued concerns about China’s unfair trade policies and non-market economic practices.”

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In June, The US Department of the Treasury announced draft rules outlawing or requiring notification of some investments in artificial intelligence (AI) and other technology sectors in China. The US government agency said the move was necessary to safeguard national security.

Such restrictions have prompted chipmakers Intel and Nvidia to introduce China-specific AI chipsets with lower specs to remain in compliance with US export sanctions. In July, OpenAI also cut access to its API from China. ChatGPT is not available in the country, but its API has remained open to Chinese developers and startups looking to build applications. According to OpenAI, the move was part of the company’s efforts to block API traffic from the regions in which its services were not supported, Reuters reported. 

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When asked if the US would continue to uphold such tech restrictions, Sullivan reiterated his government’s “small yard, high fence” approach which is focused on “de-risking, not decoupling.”

“We have to take some targeted restrictions to ensure advanced technologies aren’t used against US national security,” he said, pointing to his administration’s concerns on steps China has taken, which have economic and national security impacts on Western businesses and supply chains.

He added that while diplomacy efforts will not resolve every issue, both sides can still work to clarify misperceptions and reduce the risk of miscalculation. 

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The US-China relationship remains competitive, and should be managed “responsibly,” Sullivan noted, with diplomacy between both parties “a work in progress.” 

China’s US ambassador Xie Feng said the Asian nation’s ongoing “journey of reform and opening up” toward modernization presents opportunities for the US and the world during his keynote address at the US-China Business Forum held this week in New York, USA. The event was hosted by Forbes China, the business magazine’s Chinese-language edition.

Describing cooperation as “the only right choice” for both countries, Xie said China’s efforts to modernize as a “gateway” for the world to understand the Asian economy, reported by the state-owned newspaper China Daily. “It will both shape China’s future trajectory and influence the world in a significant way,” he said.

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“Scapegoating solves no problem, and trade war, industrial war, or tech war produces no winner,” he further added. “A major inspiration we can get from China-US relations over the past 45 years is that when we work together, both countries and peoples will fare well; but when we turn against each other, both sides and the world will suffer.”

Xie further urged both economies to expand bilateral cooperation in traditional and new areas, including artificial intelligence, climate change, and trade. 

He added that there is no reason why the US-China relationship should be a zero-sum game. 

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He pointed to Tesla’s Gigafactory in Shanghai, which now produces more than 950,000 vehicles a year, and the EV manufacturer is halfway through building its megapack factory three months after construction began. Apple, too, is beefing up its investment in China and expanding its applied research facility in Shanghai, with plans to open a new lab in Shenzhen, Xie said. 

Such investments indicate the potential of China-US business cooperation, he said, highlighting that the two countries account for more than one-third of the global economy and about one-fifth of global trade.

“Any decoupling between us would only make the world poorer,” Xie said at the forum, according to a report by state-owned media Xinhua News Agency.

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Bilateral trade volumes between the two economies have grown more than 200 times over the past 45 years to exceed $600 billion a year, he said. The partnership already is “deeply intertwined and basically inseparable,” he added. 

In a ZDNET report, Forrester analyst Charlie Dai said restrictions by the US government and companies, such as OpenAI, will slow the pace of AI innovation in China and widen the gap between China and US in several areas. However, it also will further strengthen China’s resolution to accelerate local R&D for technology self-reliance, said Dai, who is Forrester’s vice president and principal analyst for technology architecture and delivery. 

“Tech leaders such as Alibaba Cloud, Baidu AI Cloud, Tencent Cloud, and Huawei Technologies will play a key role in the software and hardware R&D,” he said. 

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