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Biden’s 100 days: hawkish approach to China stokes Beijing frictions



This is part of a series on Joe Biden’s first 100 days in office

From his first call with President Xi Jinping to an extraordinary spat between US and Chinese diplomats in Alaska, Joe Biden’s hawkish stance on China has been much closer to that of his predecessor Donald Trump than experts had predicted.

In his first 100 days in office, Biden castigated China for cracking down on Hong Kong’s pro-democracy movement, persecuting Uyghurs in Xinjiang, and military activity near Taiwan that has raised the spectre of war.

In Alaska last month, his secretary of state and national security adviser raised these issues in public opening remarks, triggering a 16-minute diatribe from the Chinese that underscored how Sino-US relations were in for a rocky ride.

“What the Biden team has been trying to do is set a new normal in the relationship where leaders in Beijing understand there’s going to be friction and that Chinese pressure on the US or its allies and partners is not going to make the US back away,” said Zack Cooper, an Asia expert at the American Enterprise Institute think-tank.

Biden has shown little interest in engaging with China on a range of critical issues as he works to strengthen the US domestically to demonstrate the resilience of its democracy, and to bolster alliances. The aim is to create additional leverage that will ultimately force China to change its behaviour.

“[China] came in with an idea of . . . resetting things . . . to either rewind the clock in some way or just blame the Trump administration for all the ills,” a senior US official told the Financial Times. “It was important to be able to make clear early on that was not the way this was going to go.”

Beyond his human rights stance, Biden has kept a strong military presence in the South China Sea, reaffirmed “rock solid” support for Taiwan, and reaffirmed its commitment to defending Japan, a US defence treaty ally.

But in areas such as trade, Biden has shown no sign of lifting tariffs that Trump levied on Chinese exports. His team is reviewing Trump-era moves on technology but most measures have not been reversed. He has also placed Chinese firms on an export blacklist, a tool often used by Trump.

“I’m not surprised Biden has emphasised democratic values by criticising China on Hong Kong or Uyghur policy because Democrats tend to emphasise values,” said Ling Chen, a China expert at Johns Hopkins University. “But I’m surprised that on economic and tech policy, Biden has largely adopted the Trump tradition.”

Alex Wong, a former Trump administration official now with the Hudson Institute think-tank, said he was pleased Biden had “shown a lot of continuity” with his predecessor. “China and our partners in the region needed to hear that this is not just a Trump administration phenomenon,” he said.

Yet there are also significant differences. Biden has worked hard to repair alliances that weakened during Trump’s presidency. Underscoring the importance of the Indo-Pacific region, the first foreign leader to visit the White House was Japanese prime minister Yoshihide Suga. South Korean president Moon Jae-in will become the second next month.

Biden convened the first leader-level summit of the Quad, which comprises the US, Japan, India and Australia, even if the widely-praised vaccine diplomacy strategy it crafted has been hit by India’s coronavirus crisis.

“When America shows up and we roll up our sleeves and work with allies . . . we can still galvanise democratic like-minded nations,” the US official said.

Following their summit, Biden and Suga issued a joint statement that included support for Taiwan, the first time the two nations had done so since 1969. The US also co-ordinated with the UK, EU and Canada to impose sanctions on Chinese officials over China’s repression of Uyghurs.

“[The Biden team] has done an incredibly good job beginning the process of strengthening alliances,” said Bonnie Glaser, a China expert at the German Marshall Fund of the US, noting how Beijing had long feared the formation of anti-China coalitions. “The Chinese are worried,” she added.

Yet while Biden has won praise, he has not articulated a clear vision for what he wants to achieve in an engagement phase. The US official said that, for now, co-operation would be limited to addressing climate change and on the nuclear security challenges posed by Iran and North Korea.

“That’s largely the immediate menu. But we certainly have been . . . undertaking an effort to methodically walk through what are our interests, what are their interests and where might they intersect,” she said.

In addition to questions about how Biden will handle technology-related national security challenges, experts are waiting to see what more action he will take on Xinjiang after calling the abuse of Uyghurs “genocide”.

Jessica Chen Weiss, a China expert at Cornell University, said it was also unclear whether actions such as the co-ordinated sanctions would cause Beijing to change its behaviour.

“Whether that has the ultimate effect of changing Chinese behaviour in the areas that the Biden administration has singled out, particularly on human rights, remains to be seen,” she said, pointing out that the Chinese response had not been to change course but to impose retaliatory sanctions.

While allies have welcomed the overall US move to re-engage, they do have some concerns, including that Biden’s strategy in the Indo-Pacific is too focused on security and not enough on economics. Biden is unlikely to join any big trade pacts due to domestic political pressure and his view that foreign policy must help the American middle class.

“It’s not clear the foreign policy for the middle-class [strategy] is going to be compatible with the trade and investment approach that most of our allies and partners in Asia want,” said Cooper.

Political dynamics in both countries also suggest it may be some time before Washington and Beijing reach a detente, according to Craig Allen, president of the US-China Business Council.

“In November 2022, Biden faces a difficult must-win midterm election. In October or November 2022, Xi must manage a difficult National Party Congress, which may very well re-elect him for another five-year term,” he said.

“Until these two political events take place, there may not be a lot of room for compromise.”

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Emerging Markets

China lands spacecraft on Mars




China has landed a spacecraft containing a rover on Mars, according to state media, in a further sign of its bold ambitions in the sphere.

The rover was part of the Tianwen-1 unmanned mission launched in July last year. Tianwen means “questions to heaven” and was named after a poem by Chinese poet Qu Yuan.

The mission, which was described by Chinese media as a “new major milestone” and the “first step in China’s planetary exploration of the solar system”, was intended to match the US by successfully landing on the red planet.

The Global Times reported that the lander and the rover from the Tianwen-1 probe reached a plain on Mars called Utopia Planitia on early Saturday morning local time, citing information from the China National Space Administration.

The Tianwen-1 probe’s lander and rover separated with the orbiter at about 4am, after which it had a three hour flight before entering Mars’ atmosphere, according to the newspaper.

The spacecraft then “spent around nine minutes decelerating, hovering for obstacle avoidance and cushioning, before its soft landing”. The rover is named Zhurong after a Chinese god of fire, and is 1.85m and weighs 240kg. It is expected to transverse the planet for about 92 days.

The probe was launched into space on July 23 by the Long March 5 rocket from the Wenchang launch pad in Hainan province, in the south of the country.

The achievement of the Mars landing is part of a wider expansion of China’s space programme. The country’s engineers launched the first part of its permanent space station into the Earth’s orbit late last month.

In 2018, China for the first time launched more vessels into orbit than any other nation.

The US views China’s efforts in space in strategic terms. “Beijing is working to match or exceed US capabilities in space to gain the military, economic and prestige benefits that Washington has accrued from space leadership,” according to the annual threat assessment published by the office of the US director of national intelligence.

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Iron ore sinks from record high on concerns over China crackdown




The scorching rally that propelled the price of steel-making commodity iron ore to a record high came to a shuddering halt on Friday on concerns China will crack down on speculative activity.

The main iron ore futures contract in Singapore fell as much as 14 per cent to $190 a tonne before recovering to $209, while there were also big drops in China where the most active contract on the Dalian Commodity Exchange slumped almost 8 per cent.

The sell-off came as the local government in Tangshan, China’s main steel-making city, said it would examine illegal behaviour and suspend production at mills found to be manipulating market prices by spreading rumours and hoarding material, according to reports from Reuters and Bloomberg.

“China’s central government seems to be very concerned about this major input for its steel-intensive economy,” said Tom Price, head of commodities strategy at Liberum. “I think what the pullback reflects is the government trying to rein in prices.”

Line chart of $ per tonne showing Iron ore prices have fallen after a strong rally

Authorities in China have sought to cool hot commodity markets, with Premier Li Keqiang calling this week for stable prices. Iron was trading at $90 a tonne a year ago and hit a record high of $230 this week. Tangshan, which accounts for 14 per cent of China’s steel output, has introduced production curbs as part of a crackdown on pollution.

However, these measures have been slow to take effect as mills in the rest of the country have rushed to crank up output to take advantage of reduced capacity in Tangshan and cash in on record domestic steel prices. A decision to remove the export tax rebate for some steel products on June 1 has also led to other mills increasing production.

As a result, China’s steel production hit a record level in March, with output up 19 per cent year on year to 94m tonnes, according to financial group ANZ. The firm said production was even higher in April, with exports up 20 per cent year on year. That in turn boosted iron ore, which climbed 35 per cent over the past month.

“What the Chinese government is trying to do is incrementally contain the steel market, mindful of the fact they have spent a fortune resurrecting their economy over the past 12 months and they don’t want to kill the recovery,” said Price. “The measures are quite clever.”

Iron ore has led a broad advance in commodity markets over the past year, fanning talk that another “supercycle” — a long period of high prices — has arrived.

That has been a boon for big iron producers such as Anglo-Australian company BHP and its Brazilian rival Vale, which require a price of just $50 a tonne to break even.

However, most analysts think the iron ore market will remain tight and prices elevated for the rest of the year. That view is based on rising steel demand outside China as big economies accelerate and while important producers in Australia are operating at full capacity.

“While the price has been thumped in the past couple of days, demand remains robust, helped by the fantastic margins the steel industry is enjoying,” said Andrew Glass, Singapore-based founder of Avatar Commodities.

Elsewhere, copper was set for its first weekly loss in more than a month amid worries that a tightening of credit in China could hit demand for the metal, used in everything from household goods to electric vehicles. Copper, which started the week at $10,412 a tonne, was trading at $10,245 on Friday.

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Biden says ‘strong reason’ to believe pipeline hackers are in Russia




Joe Biden said the US government has “strong reason” to believe the hackers behind a massive cyber attack that shut the Colonial petroleum pipeline were based in Russia, as he urged Americans to not panic over temporary fuel shortages.

“We do not believe the Russian government was involved in this attack. But we do have strong reason to believe that the criminals who did the attack are living in Russia. That is where it came from,” the US president said in a speech on Thursday afternoon at the White House.

“We have been in direct communication with Moscow about the imperative for responsible countries to take decisive action against these ransomware networks,” he added, noting he hoped to discuss the issue with Russia’s president Vladimir Putin.

The 5,500-mile pipeline system has capacity for 2.5m barrels a day of liquid fuels such as petrol diesel and jet fuel, which it carries from Gulf Coast refineries to major hubs in the north-east. The FBI has indicated that the shutdown was caused by a ransomware attack by hacking group DarkSide.

Cyber experts claim Russia tacitly allows ransomware gangs to operate in the country and will not prosecute them. In return, those criminals do not attack Russian companies and can be called upon to share their access to victims’ systems, experts say.

Last month, the US Treasury accused one of Russia’s intelligence services, the FSB, of “cultivating and co-opting” the notorious ransomware group Evil Corp, which has been sanctioned.

The Colonial pipeline — responsible for carrying almost half of the motor fuel used on the US east coast — began the process of fully reopening on Wednesday evening, five days after it was hit by a cyber attack that triggered a spate of panic-buying by motorists across the US south-east.

Biden said the US government expected a “region by region return to normalcy beginning this weekend and continuing into next week”. He urged Americans to avoid panic-buying petrol, and said he had called on state governors and local authorities to keep a lookout for any illegal price gouging by businesses.

“Don’t panic, number one. I know seeing lines at the pumps or gas stations with no gas can be extremely stressful, but this is a temporary situation,” Biden said. “Do not get more gas than you need in the next few days.”

Shortages at filling stations triggered by panic-buying continued on Thursday, with 70 per cent of stations in North Carolina running dry and about half in Virginia, Georgia and South Carolina, according to GasBuddy, a data provider.

The situation in some major urban hubs was beginning to improve, however. The amount of stations without fuel in Atlanta fell from a peak of 73 per cent overnight to 68 per cent by Thursday afternoon.

Colonial on Thursday morning said it had made “substantial progress” in bringing its operations back online and that all of its markets would begin receiving product by the afternoon.

Prices at the pump have continued to rise. National average petrol prices rose to $3.03 on Thursday, according to the AAA, an automobile association. They crossed the $3 a gallon threshold on Wednesday for the first time since 2014.

Gasoline futures retreated on the news of Colonial’s reopening, as traders anticipated supplies returning to normal. Contracts for June delivery slipped 7 cents to $2.08, their lowest level since April in Thursday afternoon trading.

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