Month: March 2023

President Joe Biden said Tuesday that Republicans’ ideas for cutting the budget could undermine U.S. manufacturing and help China dominate the world economy. 

Speaking at a semiconductor maker in North Carolina to highlight his own policies, Biden is trying to shape public sentiment as he faces off with House Speaker Kevin McCarthy, R-Calif., about raising the federal government’s legal borrowing capacity. 

McCarthy sent a letter to Biden on Tuesday saying that talks should start about possible spending cuts in return for the debt limit increase.  

Biden has said Republicans need to put forth their own budget plan before negotiations start. Without an agreement, the federal government could default on its financial obligations. 

The president tried to ratchet up pressure on Tuesday by saying that the GOP demands on the budget would only empower China, the country’s key geopolitical rival.  

Being tough on China has been a core part of the identity of former President Donald Trump, who is seeking to return to the White House in 2024, and his Make America Great Again movement. The Democratic president said Republican objections to his policies would instead strengthen China. 

“It would mean ceding the future of innovation and technology to China,” Biden told the crowd. “I’ve got news for you and for MAGA Republicans in Congress: not on my watch. We’re not going to let them undo all the progress we made.” 

Biden’s trip to Wolfspeed follows the Durham-based company announcing plans last September to build a $5 billion manufacturing facility in Chatham County that is expected to create 1,800 new jobs. The company is the world’s leading producer of silicon carbide chips. Biden had won passage last July of a $280 billion legislative package known as the CHIPS Act, which was intended to boost the U.S. semiconductor industry and scientific research. 

It’s nothing new for the Biden administration to highlight the CHIPS Act, the $1.9 trillion COVID relief bill, the $1 trillion infrastructure legislation and a roughly $375 billion climate bill — major legislation that the Democratic administration steered into law before Democrats lost control of the House. 

But now, just weeks after Biden unveiled his own budget — it includes $2.6 trillion in new spending — his administration is looking for chances to lean into its battle with Republicans over spending priorities and who has the better ideas to steward the U.S. economy in the years to come.  

Republicans have rejected Biden’s budget but have yet to unveil their own counteroffer to the Democrats’ blueprint, which is built around tax increases on the wealthy and a vision statement of sorts for Biden’s yet-to-be-declared campaign for reelection in 2024. 

His trip is part of a larger effort to draw attention to his policies, which have been overshadowed by high inflation. 

Besides Biden’s visit to Wolfspeed, Vice President Kamala Harris, first lady Jill Biden and other senior administration officials will fan out to 20 states over the next three weeks to highlight the impact of Biden’s economic agenda, according to the White House. 

Biden has said he intends to run for a second term but has yet to formally launch his reelection campaign. 

His effort to highlight legislative victories could also give him an opportunity to present voters with images of an administration focused on governing as Trump braces for a possible indictment over alleged hush money payments made during his 2016 campaign. 

Trump narrowly won North Carolina in 2020. Among the other states that Biden and administration officials will be visiting in the weeks ahead are Georgia, Michigan, Pennsylvania, Nevada and Wisconsin — crucial battlegrounds that Biden won in 2020 and states expected to be competitive again in 2024. 
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At a March 23 product launch in Shanghai, Chinese tech giant Huawei unveiled its signature P60 series of smartphones with high-end cameras and its Mate X3 series mobile phones equipped with folding screens.

There were demonstrations. There were speeches. But something was missing from the Huawei offerings: 5G, which gives phones the speedy internet access wanted by many consumers in North America, Europe and Asia.

The smartphones also lack access to Google’s Android operating system and popular Western apps such as Google Maps.

The launch quieted “rumors that it is considering selling off its handset business, thus showcasing the company’s resilience amid U.S. government restrictions,” according to the government-affiliated China Daily.

Yu Chengdong, CEO of Huawei’s device business group, said at the event, “We have experienced four years of winter under sanctions. Now, the spring has come, and we are excited about the future.”

In 2020, Huawei briefly surpassed Apple and Samsung to become the world’s largest smartphone seller when its market share peaked at 18%, according to market tracker Canalys.

Then the Trump administration imposed successive rounds of U.S. export controls.

By 2022, Huawei had a 2% share of the global smartphone market, with most of its sales in China.

Now the Biden administration is considering banning all technology exports to Huawei.

And its smartphone business today shows how the Shenzhen-based company, a major supplier of equipment used in 5G telecommunications networks, still relies on American technology for some key components.

According to a December 2022 report by Counterpoint, a Hong Kong-based analyst firm, Huawei used up its stockpile of homegrown advanced chips for smartphones, leaving it with a market share of zero for the final three quarters of the year.

“They suffered a steep drop in profits. They have a lot of damage to the brand,” James Lewis, senior vice president, Pritzker chair and director of the Strategic Technologies Program at the Center for Strategic and International Studies, told VOA Mandarin. “I think it’s a mixed bag that Huawei was never going to give up. The Chinese government was never going to let Huawei go out of business, so they’ve found ways to keep selling things. Most of what they sell is 4G or earlier.”

Huawei founder Ren Zhengfei said in a February 24 speech that the Chinese tech giant has survived U.S. sanctions by substituting components locally.

He said, “We completed a process of redesigning over 4,000 circuit boards as well as finding local suppliers for more than 13,000 components the company needs for our products within three years.”

Paul Triolo, senior vice president for China and technology policy lead at Albright Stone Group, a business consulting firm, said the risks of using Cold War era tools such as export controls can have unintended consequences.

In an email, Triolo told VOA Mandarin, “If the result of the ‘small yard, high fence’ policy over the next decade is to significantly slow technology innovation and massively incentivize the development of a large rival technology ecosystem, then the US approach will be judged to have failed, with many losers. Any short-term national security gain will be very hard if not impossible to measure while the short-term pain, particularly for US technology companies, will be substantial, as will the long-term consequences to global innovation systems.”

After Huawei was caught stealing trade secrets, evading U.S. bans on transferring technology to Iran and was suspected — though never proved — to be an arm of the Chinese intelligence services, the U.S. began imposing a series of controls. Since 2019, these have cut off Huawei’s supply of chips from U.S. companies and its access to U.S. technology tools to design its own chips and have them manufactured by its partners.

The Biden administration is considering tightening export control measures against Huawei and completely banning all business dealings with the company, including banning exports to Huawei’s suppliers and middlemen.

For now, vendors selling less-desirable technologies such as 4G phones can still apply to the U.S. Department of Commerce for a license to do business with Huawei. The Commerce Department has approved billions of dollars in such sales from U.S. suppliers, including Intel Corp., which sells chips used in Huawei laptops, and Qualcomm Inc., which supplies chips for 4G smartphones.

Ren said in the speech last month that Huawei invested $23.8 billion in research and development in 2022. “As our profitability improves, we will continue to increase research and development expenditures.”

He added that the company has established its own enterprise resource planning system called MetaERP. Set to launch in April, it will help run its core business functions including finance, supply chain and manufacturing operations.

Lewis said Huawei had been able to circumvent some U.S. controls.

“They have a plan on how to recover, and they’re actually making it work. It doesn’t work in a lot of countries, but it works in Latin America. It works in Africa.”

This means the U.S. will need to refine its strategy on Huawei, Lewis said.

“It has to look at how does it match Huawei, how does it match China in the Southern Hemisphere,” he said. “So the Latin Americans are buying from China and from Huawei. Huawei has Africa pretty much sewn up. So, it’s really a question of how you undo that. And the answer is, you need to do it through development aid, and I don’t know if Western countries are willing to spend.”
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Ford Motor Company’s plan to create batteries for the rapidly expanding electric vehicle (EV) market could encounter congressional speed bumps because of the carmaker’s plan to use technology created by a Chinese company with ties to the communist government.

Ford executive chairman William Clay Ford Jr. announced in February that the company would spend $3.5 billion to build a new battery plant in Michigan and employ U.S. workers to promote U.S. “independence” in the EV market.

“Right now, many [U.S.] automakers import most of their batteries from abroad,” Ford said at that time. “This is a slow process that makes us vulnerable to supply chain disruptions.”

He added that the U.S.-produced batteries would “charge faster” and be “more affordable” and “incredibly durable.”

But the news did not sit well with some lawmakers, including Republican Senator Marco Rubio, who opposed President Joe Biden’s 2022 Inflation Reduction Act, which included tax credits to encourage domestic EV production.

Earlier this month, Rubio introduced legislation blocking tax credits for producing EV batteries using Chinese technology and called on the Biden administration to review Ford’s partnership with the company, Contemporary Amperex Technology Co. Ltd. (CATL).

“Nine billion to help people buy tax credits,” Rubio said. “By the way, with a Chinese battery in it. … I imagine we’ll spend a bunch more money to buy solar panels which are also made in China.”

In a Skype interview last week with VOA, China expert Jonathan Ward said “the White House has already called for a supply chain review that would cover essentially next generation batteries, critical minerals and rare earths, pharma and other biotechs.”

“We’re in the midst of this competition for supply chain security and industrial capacity where relying on our primary geopolitical adversary is really untenable in the long run,” he said.

Ward has authored two books outlining China’s economic, military and political goals. He said decades of outsourcing technology and manufacturing has left the United States with little choice but to work with Chinese companies like CATL to advance domestic EV development.

“Essentially 60% of the battery market is made up of Chinese corporations,” he said. “CATL, the battery maker in question here, is already 34% of global market share. The other companies are Japanese and South Korean, but they are smaller than the aggregate Chinese battery makers. So, we have this contest that we are going to have to deal with.”

Sarah Bauerle Danzman, an associate professor in international studies at Indiana University Bloomington, said since the U.S. currently “doesn’t have the capability” to produce EV batteries, “what is the theory of change that helps us get to that capacity?”

“Then the question becomes, are we becoming overly reliant or staying reliant on technology that ultimately the Chinese government controls rather than the U.S.?” she said.

From 2019 to 2020, Danzman was a policy adviser and case analyst with the Committee on Foreign Investment in the United States (CFIUS) at the State Department’s Office of Investment Affairs. She led the unit that reviews foreign investment transactions for possible national security concerns.

Rubio wants CFIUS to review Ford and CATL’s licensing agreement.

“Rubio is really focused on this idea that we don’t want to be dependent on Chinese technology,” she explained to VOA last week via a Skype interview. “The U.S. government coming in and changing those structures is a big imposition on the private sector, so there really does need to be a strong argument for why it needs to do so.”

“I think a lot of companies are going to find themselves in situations like this where Chinese partnerships [are] coming back to haunt us here,” said Ward. “I think our companies that have been entangled in the China market all have to reassess what they are doing.”

In its response to Rubio’s proposed legislation, Ford said its own subsidiary will build and operate the new battery plant in Michigan, and that “no other entity will get U.S. tax dollars for this project.”

During February’s announcement, Ford CEO Jim Farley said the proposed BlueOval Battery Park Michigan meets goals outlined by the Biden administration.

“We’re growing production of batteries here at home, reflecting the central purpose of the Inflation Reduction Act — that’s why it was passed, for this project,” Farley said.

Ford’s plans for the new Michigan facility come as the auto manufacturer reported more than $2 billion in operating losses in EV-related business in 2022.
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