Top leaders of the United States and China held a two-hour phone call on Tuesday, setting the tone before US Treasury Secretary Janet Yellen meets with her Chinese counterparts in Guangzhou and Beijing on April 4-9.
Chinese President Xi Jinping told US President Joe Biden that the US side has adopted a string of measures to suppress China’s trade and technology development, and is adding more and more Chinese entities to its sanctions lists.
“This is not ‘de-risking,’ but creating risks,” Xi said. “If the US side is willing to seek mutually beneficial cooperation and share in China’s development dividends, it will always find China’s door open.”
“If the US is adamant on containing China’s hi-tech development and depriving China of its legitimate right to development, China is not going to sit back and watch,” he said.
Xi’s comments came after the US Commerce Department on March 29 revised its chip export rules, which were announced last October, to make it harder for China to obtain US artificial intelligence (AI) chips and chip-making equipment.
The revised rules, which will take effect on Thursday, said restrictions on chip shipments to China also apply to laptops equipped with built-in advanced AI chips.
According to the rules, a license is required for the export of digital computers and electronic assemblies with adjusted-peak-performance (APP) exceeding 70 weighted teraflops (WT), and also for software specially designed or modified for the development or production of digital computers with APP exceeding 24 WT.
The US will adopt a presumption-of-denial policy for the license applications for the export to destinations including Macau and D:5 countries such as Russia and China. It will implement case-by-case review when it comes to AI chip exports to China.
Some media reports said Nvidia’s RTX 4090D graphics cards and H20 (Hopper) data-center accelerators, with computing power of 73.5 and 74 teraflops, respectively, will be affected by the updated rules.
The demand for RTX 4090D graphics cards has increased over the past few days as vendors in Shenzhen are stockpiling them.
The Chinese Commerce Ministry said it strongly opposes the revised US chip export rules.
It complained that the US has been overstretching the concept of national security, setting more obstacles for the normal trade cooperation between Chinese and American firms, imposing a heavier compliance burden and bringing remarkable uncertainties in the global chip sector.
‘Negative factors’
After the latest Xi-Biden phone call, both Beijing and Washington described the dialogue as candid and constructive. The two sides agreed to stay in communication and tasked their teams to follow up on the issues discussed in the two leaders’ meeting in San Francisco last November.
The Chinese side said it welcomes upcoming visits to China by Yellen and US Secretary of State Antony Blinken in the near future.
During the phone call, Biden raised continued concerns about China’s trade policies and non-market economic practices, which the US says unfairly harm American workers and families.
Biden said the US will continue to take necessary actions to prevent advanced US technologies from being used to undermine American national security, without unduly limiting trade and investment.
Xi said the China-US relationship is beginning to stabilize but some negative factors have also been growing. He said this requires attention from both sides.
Wu Xinbo, executive dean of Institute of International Studies at Fudan University, said Xi and Biden wanted to express their key concerns about the Sino-US relations via the phone call and set the tone for the two nations’ next-phase development.
Wu said China wants the US side to uphold its credibility. He said the two nations should honor their commitments agreed in San Francisco to each other with action.
He observed that the Biden administration had been trying to suppress China in the name of “competition” in order to serve its domestic political needs. He said Beijing is upset that the US keeps pushing forward its Indo-Pacific strategy and frequently provokes China by supporting the Philippines in the South China Sea.
Diao Daming, professor at the School of International Studies, Renmin University of China, said the China side wants the US to keep its promises made in San Francisco last November, as they have not been realized.
He said the US should recognize and manage the risks in the US-China relations, referring to the conflict over the United States’ sanctions against Chinese firms and its ban on chip exports to China.
Support for Russia
In the phone call with Xi, Biden raised concerns over China’s support for Russia’s defense industrial base and its impact on European and transatlantic security.
During a meeting with Chinese Foreign Minister Wang Yi in Bangkok on January 26-27, US White House national security advisor Jake Sullivan said that China had sold heavy trucks and other defense industrial base gear to Russia.
He said the US had seen support from Chinese companies to help Russia reconstitute its defense industrial base, a development that he said may portend an imperial war of conquest in Europe. This goes to a fundamental national security interest of the US, Sullivan said.
On February 23, the Biden administration sanctioned 93 entities from Russia, China, Turkey and other countries for supporting Russia’s war effort in Ukraine.
Also in February, US officials told the media that the White House is considering restrictions on imports of Chinese electric vehicles, amid growing US concerns about data security. Last December, Biden had said the US might raise tariffs on Chinese EVs.
On March 27, Yellen said that excess capacity building in China’s new industries like solar, EVs and lithium-ion batteries could have a negative impact on other countries.
Yellen will meet Chinese Vice Premier He Lifeng in Guangzhou on April 5-6 and Premier Li Qiang in Beijing on April 7.
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Follow Jeff Pao on Twitter at @jeffpao3