China’s Parting Shot at Trump is Sanctions on Former Officials

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As the Biden Administration begins its term in Washington, Beijing has announced that many prominent figures of Trump’s foreign affairs team have been sanctioned. 

Blaming them for “severely violating China’s sovereignty” the sanctions ban the listed from entering China, Hong Kong, and Macau as well as doing business with any Chinese firms.  Included on the list are former Secretary of State Michael R. Pompeo, former Advisor Peter K. Navarro, former National Security Advisor Robert C. O'Brien, former Assistant Secretary of State for East Asia David R. Stilwell, former Deputy National Security Advisor Matthew Pottinger, former US Health Secretary Alex M. Azar II, who was the highest-ranking official to meet with the Taiwanese President and executive in 40 years, former US Undersecretary of State Keith J. Krach, and US Ambassador to the UN Kelly D. K. Craft.

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John R. Bolton and Stephen K. Bannon were also added to the list. Bannon currently has a podcast called War Room: Pandemic where he and guests frequently allege that the Covid-19 pandemic was created in a lab in China. Of those on the list, Bannon likely has the most experience in business in China: in 2005 he ran a trading desk for World of Warcraft gold in Hong Kong, mining it in Shenzhen then selling it for fiat currency abroad. 

“Over the past few years, some anti-China politicians in the United States, out of their selfish political interests and prejudice and hatred against China and showing no regard for the interests of the Chinese and American people, have planned, promoted and executed a series of crazy moves which have gravely interfered in China's internal affairs, undermined China's interests, offended the Chinese people, and seriously disrupted China-U.S. relations,” a statement from the Ministry of Foreign Affairs read. 

These sanctions should come as no surprise as days before the Trump administration concluded, Beijing had announced it was planning a round of sanctions on US officials for lifting restrictions on US diplomats interacting with their Taiwanese counterparts as well as labelling China’s actions in Xinjiang a genocide and a crime against humanity.

The US has placed many in Hong Kong’s leadership on the Department of the Treasury's Office of Foreign Assets Control for their role in cracking down on protests in Hong Kong. Reportedly, the Chief Executive of Hong Kong, Carrie Lam, has to be paid in cash as many banks in Hong Kong which also have relationships with US institutions or hold US dollars cannot do business with her.

China’s sanctions on former US officials are not expected to be nearly as damaging. 

Trade War Détente with China

Without a doubt, Beijing is going to be looking for a détente, if not a reset, in trade talks with Washington as its economy experiences its slowest growth in years. Tariffs on goods imported from China was one of the pillars of Trump’s campaign, and the White House kicked off a concerted effort to target PRC-made goods with tariffs and other trade barriers beginning in 2018. 

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For the US, the trade war had a mixed to moderate impact on the economy. However, within Asia, countries that worked to offer an alternative to a China-run supply chain were huge beneficiaries. Taiwan, a US ally in the region, came out of the trade war with a huge trade surplus and stronger economies while those that made bets on China as their chief trading partner suffered. In the first half of 2019, Taiwan’s exports to the US went up by $4.2 billion making it a trade war winner and its economy outpaced China’s growth by 2.7% versus China’s 2.5%.   

But as the Biden administration is only in its early days, time will tell the direction it will take on its China policy. For the time being, it will likely take a back seat as the White House determines what course it will take on stimulus and pandemic relief.

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