In recent speeches, Donald Trump reiterated his intention to halt trade ties with China. The former president's emphatically harsh rhetoric is prompting the White House to demonstrate its willingness to strengthen anti-China measures. As usual, the Chinese remain silent and pretend that nothing is happening. During his election campaign, the Republican leader assured that he would impose customs duties of 60% on Chinese goods if elected president. According to Trump, the purpose of these measures is to "bring companies back to the United States". In addition, the ex-president hinted at the need for greater control over investment flows between the two countries. Many experts believe that such steps will actually mean the severance of economic relations with the People's Republic of China, though with certain reservations. Already, a significant part of Chinese products enters the USA through third countries. They come mainly from Southeast Asia and Mexico, with the latter displacing the PRC as the leading importer of goods to the United States in 2023. A multiple increase in tariffs will lead to a complete overhaul of supply chains between the two largest economies. The additional costs, analysts warn, will be borne by American consumers. Against this background, the local media began publishing about the administration's plans to announce measures to limit financial transactions with Beijing in the near future. The reason cited is the supposedly increased risks of "sensitive" personal data falling into the hands of the Communist Party of China. It should be noted that restrictions against Chinese electric cars are being worked out under the same pretext. As expected, the presidential election campaign is becoming a key factor influencing the development of US-China ties. In this context, the Democrats are facing a challenging task. On the one hand, the White House is interested in maintaining the current dynamics of US-China contacts. Among other things, this is due to the need to demonstrate the effectiveness of the "responsible competition" with Beijing. On the other hand, Donald Trump's scathing statements are resonating with voters, pushing the administration to take stronger measures against the Public Republic of China, primarily protectionist ones. Of course, the Chinese are closely monitoring the US election campaign and are trying not to comment on Trump's attacks against them.
At the end of July, Beijing took a number of countermeasures against American military-industrial complex companies engaged in military-technical cooperation with Taipei. On July 25, the Ministry of Foreign Affairs of the People's Republic of China announced restrictions against three subsidiaries of American corporation Lockheed Martin in accordance with the national Law on Countering Foreign Sanctions. It is especially about freezing in China the assets of Missile System Integration Lab, Advanced Technology Laboratories and Lockheed Martin Ventures, as well as the funds and property of the Lockheed Martin CEO James D. Taiclet, the COO Frank St. John and the CFO Jay Malave. According to the measures taken, named individuals are now banned from entering the PRC, including Hongkong and Macau. It should be noted that the current round of anti-US sanctions followed the Washington's approval of a number of contracts totaling $660 million for the sale of Altius 600M-V unmanned aerial vehicles, Switchblade 300 loitering munitions, spare parts for F-16 fighters and other related equipment. On this matter, the Ministry of Foreign Affairs of the PRC made a statement pointing out that arms sales to Taiwan violate the "One China" principle and three China-US joint communiqués, constitute blatant interference in the country's internal affairs and undermine national sovereignty and territorial integrity. Additionally, a spokesman for the China's Ministry of National Defense demanded that the United States comply with the obligation not to support Taiwan's independence and stop arming the "rebellious province". Within two days after the restrictions were announced, 66 aircrafts of the People's Liberation Army Air Force entered the island's air defense identification zone, and some of them were 50 km away from the Taiwanese coast. In general, the Chinese sanctions seem to sound serious and threatening, but in reality, they are not. In particular, the restrictive measures are largely symbolic in nature, as the US companies of the military-industrial complex are already prohibited from doing business in China due to a long-standing government ban on exporting defense products and services to the country. Moreover, as far as we know, the Lockheed Martin's management has no assets in China, so trying to deprive this company of something it doesn't have is rather ridiculous. Therefore, the Chinese attempt to attack the US looks absurd. We see another weakness of the PRC in confronting America and its inability to take really tough measures to defend its national interests in the context of Taiwan. It may well be that the signal is indirectly addressed to the US civilian businesses, many of which still have extensive interests in China. The purpose of this is, among other things, to discourage them from potentially supplying Taipei with dual-use goods or implementing any technical assistance programs for the Taiwanese Armed Forces.
The Chinese expert community is focused on competition between China and the USA for AI domination. China's local AI companies in contrast to country's authorities are skeptical towards achieving global AI leadership by 2030 amid the American sanctions, lack of state support, variety of technologies and lack of staff. Many of the Western countries acknowledged China's lagging from the developed world. The recent article of China's minister of science and technology Yin Hejun rates highly the AI achievements of China. It mentioned the volume of local AI market in 2023 was 500 billion yuan, the number of AI companies is above 4400, among these companies 108 with capitalization over 1 billion US dollars. About 500 institutes of high education introduced programs to study AI. The article highlights the 2017 plan to develop the next generation AI to make China the global AI leader by 2030. But according to the unanimous opinion of local experts, China is still behind the US. Americans are almost monopolized the global AI market by bringing Open AI's advanced ChatGpt to the masses. Fast development of this tool became possible due to the feedback from users, including China where this service is officially banned, and this made the gap between America and China even bigger. China's local companies responded with creation of series of competitive LLM products that are the basis for generative instruments which are used at least for now only on China's local market. At the moment the technological giants (Baidu, Alibaba, Iflytek) achieved only the level of ChatGpt 3.5 and plan within the year to surpass the actual ChatGpt 4. However, the Americans also keep pushing and taking leadership on the market of generative AI. OpenAI's text to video Sora was presented in February and has no Chinese analogs and repeats the ChatGpt history. According to the representatives of IT companies, the pace of AI development in China is on hold by a number of factors. In March the head of Iflytek Liu Qingfeng pointed that technological gap between China and America is not decreasing because of the US sanctions that limited access to the global LLM achievements. He believes the solution is promoting the AI by relying on local projects. As example he mentioned the LLM model of his company Spark that got a push to development after the Western sanctions and by making a contract with another sanctioned Chinese company Huawei. The head of China Electronic Corporation Zeng Yi also said that the lack of state support of local developers, start-ups and IT companies in the AI race makes the gap between China and the West even bigger. The businessman asks the developers to cooperate with the local producers since the Western technologies may at any moment lose functionality and support. The representatives of the local IT business believe the uncontrolled development of national hardware base requires too much resources and hinders the pace of AI development. The chairman of JD.com's Technology Committee Peng Cao notes that scattered technical chip solutions make it hard to develop software. This way local companies should consolidate their efforts to create AI platforms and lower their amounts. At the same time, China's developers are still highly dependent on Western software solutions. This March the analysts of Beijing Academy of Artificial Intelligence marked in their report to China's State Council Li Qiang the problem of high popularity of Western tools with free access. According to their data the biggest part of local AI developers uses 2023 LLAMA model of American company META, which owns Facebook and Instagram and is among global AI leaders, for their own LLMs. According to Xiaomi founder Lei Jun the key flaws of Chinese AI ecosystems are lack and turnover of staff. Only 40% represent the qualified personnel while the graduates prefer West to build careers. For instance, in Sora two of thirteen employees are from China. Xiaomi believes the only way to achieve the ambitious aim of overtaking the US and becoming the global AI leader is tight cooperation of state and business to bring back the best and young professionals to work on the breakthrough projects.
The US Administration has declared its commitment to strengthening the military presence in the Asia-Pacific region with only one purpose - to deter China. In mid-May, Senate hearings were held, where Defense Secretary Lloyd Austin and Gen. Mark Milley, chairman of the US Joint Chiefs of Staff, spoke. Both speakers paid considerable attention to the problem of China. The head of the Pentagon announced his intention to hold a face-to-face meeting with Defense Minister of China Wei Fenghe at the margins of the Shangri-La Dialogue on June 10-12 in Singapore. He also added that it is important for the US Administration to keep contacts with Chinese counterparts as part of efforts to maintain open two-way communication channels. At the same time, the main thesis of a Lloyd Austin's speech was that China is still the main threat for the US. Washington intends to build up its military potential in the Indo-Pacific; increase the stocks of weapons and equipment and strengthen the defense infrastructure, in particular, missile and air defense on Guam according to the National Security Strategy. To do this, the budget for 2023 includes $6bn for the implementation of the Indo-Pacific initiative. Mark Milley also emphasized that within the framework of the announced by the leader of China Xi Jinping army modernization, there is also a task for the People's Liberation Army to be ready for the hypothetical seizure of Taiwan by 2027. At the same time Gen. Milley notice that this doesn't necessarily mean that China is going to seize Taiwan for real by this time. But the Beijing's striving to provide the necessary facilities for the reunification of the island deserves the closest attention. In general, the statements of the high-ranked representatives of the defense department once again demonstrated the US Administration's focus on deterrence of China. Lawmakers positively perceived this anti-Chinese sentiment. At the same time, they expressed concern over the expansion of the Republic of China Navy which is estimated to have around 460 naval ships by year 2030 against 280 ships in the US. For this reason, the main emphasis was placed on the importance of strengthening Washington's relations with its allies and partners to maintain the needed military potential in sea.
China stepped up work in the development of new types of weapons and military equipment. In this connection US and Australia are trying to level Beijing's military potential in Asia-Pacific region. In spite of sanctions pressure China continues to focus on producing new types of weapons superior to their western counterparts. According to the available data, public and state enterprises of China are planning to invest $471mln in creation of a venture capital fund, aimed at development of advanced military technology in circumvention of US sanctions. Guangzhou Haige Communications Group, China Poly Group and other companies will take part in this project. The fund should become a platform for imposing technology competition on US, stimulating innovation market, strengthening foreign ties and commercialize technologies. Besides, experts believe that costs of building ships for the People's Liberation Army Navy Beijing will compensate by civil shipbuilding. In particular, China State Shipbuilding Corp., which fulfills commercial orders for Taiwan, France, Japan and Switzerland, is now building the third aircraft carriers for the People's Liberation Army. To overcome the current situation, specialists from US recommended that Washington reorient foreign companies to Japanese and South Korean shipbuilders. According to Australian Strategic Policy Institute, a threat to the Australian Navy and other US allies in Asia-Pacific region is Chinese YJ-12 anti-ship cruise missiles that can be used as the most effective tool to counter Western fleets in the event of their attempts to enter the waters disputed by Beijing in the Western Pacific. Phased array radars of Australian Hobard-class destroyers and Anzac-class frigates may locate such missiles only within line of sight. China hypersonic missile technology is another reason for Washington and Canberra to be worried. In April 2022, Australia, Great Britain and US announced their intention to expand cooperation within AUKUS in productions of hypersonic missiles. At the same time the ramjet engine, produced by Australian Hypersonix, will help to overcome the backlog of the United States. Alongside this, US and Australia deepen coordination of their armed forces trying to form a system of complex deterrence on China in space and cyberspace. In March 2022, a meeting of the leadership of the ministries of defense of US and Australia was held at the intelligence center Pine Gap. According to the statement of the parties, Washington in working on the expansion of the digital convergence with Canberra to provide communication between space commands; to expand joint cybersecurity exercises and to improve China satellite surveillance. All of this is a result of the increasing China's military capabilities in space and cybertechnologies. Beijing announced a creation of artificial intelligence system, which will automatically recognize shock waves in wind tunnels used to develop hypersonic missiles. China also developed microwave device which can disable and destroy satellites. Moreover, China tested a hypersonic planning device capable of carrying nuclear weapon. In response to this, specialists from "CSIS" recommended Washington to deploy a sensor system in orbit to counter Chinese weapons. As a result, US signed a $32mln contract with "GEOST" to create a prototype of space-based sensors. Thus, we see that the confrontation between US and China is reaching a new level.