China and the US held their first high-level talks of the Biden administration this week in Alaska, and appropriately for the location, the atmosphere was frosty. US National Security Advisor Jake Sullivan kicked off by saying: “We do not seek conflict, but we welcome stiff competition, and we will always stand up for our principles, for our people, and for our friends,” while Sec of State Blinken said the US side would shortly outline its “deep concerns” about Chinese actions in various spheres. China’s top diplomat Yang Jiechi responded by accusing Washington of using its financial and military might to squeeze other countries and said that abusive US national security policies threatened the future of global trade.
The Sino-American talks followed “Quad” discussions between the US, Japan, India and Australia, so the idea of the US representing a broader coalition of interests in the discussions would very much have been on the minds of both delegations. Now that both sides have declared their general positions, how it plays out will depend on specifics. There are the two Canadian Michaels, there is Huawei, and there are a bunch of periphery issues, including SCS, Burma and Taiwan, that could conceivably come into play. And then there are trade sanctions, hacking allegations and a host of other stuff that could be addressed. It’s a complicated chess game, but the gameplay is at least clearer and more orderly than it was under the previous US administration.
Meanwhile, the economy continues to do well, both domestically and in terms of exports, but the authorities are pouring on the pressure on the tech giants. The message, triggered by the Ant Financial IPO debacle, is clear—stay in line. Basically all the top companies were fined over various investment shenanigans and the CEO of Ant Financial stepped down.
Finally, our eye was caught by an item on Caixin saying Chinese camera phone component supplier OFilm Group had lost one of its top foreign clients, Apple, meaning a loss of tens of billions of RMB in revenue. Is it a reflection of the Alaskan frostiness and a bellwether for other such supply chain shifts? Could be.
Have a good weekend.