Why the US delayed China sanctions after shooting down a spy balloon
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[May 11, 2023]
By Michael Martina
WASHINGTON (Reuters) - When an alleged Chinese spy balloon traversed the
United States in February, some U.S. officials were confident the
incursion would galvanize the U.S. bureaucracy to push forward a slate
of actions to counter China.
Instead, the U.S. State Department held back human rights-related
sanctions, export controls and other sensitive actions to try to limit
damage to the U.S.-China relationship, according to four sources with
direct knowledge of U.S. policy, as well as internal emails seen by
Reuters.
The delays to items on the department's "competitive actions" calendar,
a classified rolling list of steps the Biden administration has planned
related to China, have alarmed some U.S. officials and revealed a divide
between those in the U.S. government pushing for tougher action against
China and others advocating a more restrained approach.
While the State Department signaled U.S. displeasure over the balloon by
postponing Secretary of State Antony Blinken's scheduled visit to
Beijing, an internal State Department message reviewed by Reuters shows
senior U.S. officials delaying planned actions against China.
Rick Waters, deputy assistant secretary of State for China and Taiwan
who leads the China House policy division, said in a Feb. 6 email to
staff that has not been previously reported: "Guidance from S (Secretary
of State) is to push non-balloon actions to the right so we can focus on
symmetric and calibrated response. We can revisit other actions in a few
weeks."
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The sources said many measures have yet to be revived. The decision to
postpone export licensing rules for telecom equipment maker Huawei and
sanctions against Chinese officials for abuses of Uyghurs, has damaged
morale at China House, they said.
President Joe Biden's administration has sought to prevent a further
deterioration in ties with China's Communist government, which many
analysts say have hit the lowest point since they began in 1979.
Former diplomats and members of Congress from both parties have argued
that the U.S. must keep channels of communication open with Beijing to
avoid misunderstandings and navigate crises.
But the sources said the current policy hews too closely to an earlier
strategy of engagement that enabled China to extract concessions in
exchange for high-level dialogues that often yielded few tangible
results.
Speaking to Reuters on condition of anonymity for fear of repercussions,
they said Blinken had largely delegated China policy duties to Deputy
Secretary of State Wendy Sherman, the United States' second ranked
diplomat.
In response to questions from Reuters, a senior State Department
official said that under the Biden administration, the State Department
had "coordinated with the interagency on a record-setting number of
sanctions, export controls, and other competitive actions" toward China.
"Without commenting on specific actions, this work is sensitive and
complex, and obviously sequencing is essential to maximize impact and
make sure our messaging is clear and lands precisely," the official
said.
Sherman did not respond to a request for comment.
Testifying before the Senate Foreign Relations Committee on Feb. 9, she
said the department was "modernizing" its work and would "keep pushing
back against the PRC's (People's Republic of China) aggressive military,
diplomatic, and economic practices."
'KEEPING CHANNELS OPEN'
In late March, Waters told a staff meeting that the State Department
would "move on" from the balloon incident with China, following guidance
from Sherman who was eager to reschedule the Blinken trip, two of the
sources said.
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One Chinese official confirmed to Reuters that a renewed Blinken visit
would be more likely if the U.S. accommodated Beijing's wish to shelve
the issue, adding that China had conveyed it did not want the FBI to
release details of its investigation into the downed balloon.
The two sources said the FBI report had originally been anticipated for
mid-April release.
The FBI declined to comment on any report. The State Department told
Reuters it had never discussed the issue with the bureau and declined to
comment on discussions with China over the matter.
Asked about the release of the FBI report at a May 2 Senate Foreign
Relations Committee hearing, Daniel Kritenbrink, the department's top
diplomat for East Asia, said: "I absolutely support making sure that
people are aware of what happened."
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![](../images/051123PIX/news_a36.jpg)
The suspected Chinese spy balloon drifts
to the ocean after being shot down off the coast in Surfside Beach,
South Carolina, U.S. February 4, 2023. REUTERS/Randall Hill/File
Photo/File Photo
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He added that the department was committed to managing competition
between the U.S. and China.
"Part of that, in our mind, has to involve senior-level
communication, keeping channels open," Kritenbrink said.
Craig Singleton, a China expert of the Foundation for Defense of
Democracies, said the State Department was "caught in a trap of its
own making," forgoing actions aimed at maximizing U.S. leverage in
its eagerness to resume high-level exchanges.
"This decision, while well-intentioned, strengthens China's hand,"
Singleton said.
DELAYS TO HUAWEI CONTROLS
China House - formally the Office of China Coordination - was
launched in December as a reorganization of the department's China
desk, intended to sharpen policies across regions where China's
expanding influence challenges the U.S. and its allies.
The four sources Reuters spoke to for this story all voiced concern
that the State Department risked failing in its efforts to rebuff
what many in the West view as China's ambition to displace the U.S.
as world leader.
China's embassy in Washington declined to comment.
The sources said the Commerce Department's Bureau of Industry and
Security had prepared rules to revoke Huawei-related export control
licenses, even those covering less sensitive technology. The
departments of defense and energy were ready to back the changes in
late February, but Sherman did not support stricter rules as the
State Department was seeking to revive Blinken's visit, they said.
The four agencies on the End-User Review Committee that decides such
actions did not vote on the matter because of State Department
opposition, they said.
"The licensing rule has been written. There is draft Federal
Register language," one source said.
State Department officials declined to comment specifically on the
licensing rules. One official said that Sherman did not call the
Commerce Department to delay any Huawei actions.
Commerce told Reuters it does not comment on deliberations about
specific companies, and that it works with other parts of the
government to "continually assess our export controls."
The defense and energy departments did not respond to a request for
comment.
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The State Department also pushed off sanctions against Chinese
officials, including some at the Central Committee's United Front
Work Department bureau responsible for policies in Xinjiang, where
the U.S. government says Beijing is committing genocide against
Muslim Uyghurs.
China denies all abuses.
Those sanctions, prepared and delayed for the first time in October
2022 and delayed again in mid-January because it was deemed too
close to Blinken's visit, have yet to be released, three of the
sources said.
Resistance to such actions has contributed to staffing struggles at
China House, with vacancy rates as high as 40%, the four sources
said.
Senior officials acknowledged morale problems at China House, but
denied they were linked to policy.
"We are in the midst of a re-org. It's hard," one of the senior
department officials said.
The State Department has struggled with staffing and morale issues
left over from a Trump administration-era hiring freeze.
But some staff recently have requested reassignment, said the
sources, who argued that the delays signaled to working-level
officials that China actions are not a priority.
"Even when we are on the one-yard line, we debate whether we should
cross," another source said.
(Reporting by Michael Martina; Editing by Don Durfee and Suzanne
Goldenberg)
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