In this week's edition:

• The Big Picture 
• Yellen on U.S. Economic Strategy to China 
• House Committee Introduces Bill to Ban Chinese Drone Purchases by Federal Government 
• Select Committee on China Wants to Address Chinese Access to RISC-V 
• U.S. Investing in African Mines for Critical Minerals 
• U.S. Sanctions Force China’s YMTC to Look for More Funds 
• U.S.-China Nuclear Arms Talks 
• U.S. Sanctions China, Turkey, and U.A.E. Entities to Assist Ukraine 
• AI Bletchley Declaration

With the Asia-Pacific Economic Cooperation (APEC) summit just 2 weeks away, the U.S. and China are focused on managing relations to allow for a productive meeting between Presidents Joe Biden and Xi in San Francisco. Following the long list of U.S. officials to visit China, U.S. climate envoy John Kerry is the latest to hold an important bilateral with his Chinese counterpart, Xi Zhenjiang. These talks are taking place from Saturday-Monday in California ahead of the COP28 conference. Reining in China’s carbon emissions will be the main topic and climate change has been one of the few bright spots between the 2 sides in recent days.

Between Biden and Xi discussions over the situation in Taiwan will be at the top of the agenda as both countries seek to ease tensions and maintain peace and stability across the Taiwan Strait, while China’s stance on Ukraine and Israel will also likely also be key points. Meanwhile, the People’s Daily newspaper, a mouthpiece for the Communist Party, wrote that the U.S. and China “should be partners rather than adversaries,” and “cooperate…rather than engaging in a zero-sum rivalry.” It expressed that Beijing wishes for stable and improved relations with the U.S.

As the United States seeks to de-escalate tensions with China, it has continued to work with global allies to isolate China. On the sidelines of APEC, Japan and the U.S. will hold economic 2+2 talks between their economic and foreign ministers. They will likely discuss supply chains, advanced technology, and economic security. Commerce Secretary Gina Raimondo and Secretary of State Antony Blinken will attend.

Treasury Secretary Janet Yellen stated that the U.S. requires a “serious, clear-eyed" economic strategy for China during a speech at the Asia Society in Washington. She explained that the U.S. also aims to broaden trade and diversify supply chains with allies and partners. Yellen added that the U.S. does not seek to decouple from Beijing, but that the U.S. would not compromise its national security or human rights goals.

Chair Mike Gallagher (R-WI) of the House Select Committee on the Chinese Communist Party and Rep. Joe Courtney (D-CT) introduced “The American Security Drone Act” with Select Committee Ranking Member Raja Krishnamoorthi (D-IL) and Rep. Rob Wittman (R-VA). The legislation would ban the Federal government from purchasing drones manufactured in nations designated as national security threats, such as China.

The bill would also prevent local and state governments from using Federal grants to purchase Chinese drones, and it would mandate a Federal report that outlines the quantity of foreign commercial off-the-shelf drones and covered unmanned aircraft systems procured by Federal agencies and departments from China.

“The Chinese Communist Party consistently weaponizes its near monopoly on the drone market against the good guys; restricting drone exports to Ukraine while Hamas uses them to perpetrate brutal terrorist attacks,” stated Rep. Gallagher. “This bill would prohibit the federal government from using American taxpayer dollars to purchase this equipment from countries like China, supporting the PRC’s malign behavior and posing a serious national security threat to the US and our allies. It is imperative that Congress pass this bipartisan bill to protect U.S. interests and our national security supply-chain."

Chairman Mike Gallagher and Ranking Member Krishnamoorthi with 15 members of the committee sent a letter to Commerce Secretary Gina Raimondo calling on her Department to address Chinese access to an open-source semiconductor research and design platform known as RISC-V (“risk five”). The platform allows anyone to leverage knowledge from it towards the designing of better semiconductors. In other words, RISC-V allows Chinese firms to circumvent U.S export controls on semiconductors. According to the lawmakers, Chinese AI company Biren, which is on the Entity List, is already using RISC-V technology for chip production, and the China Electronic Industry Standardization Technology Association is forming a RISC-V committee to spread Chinese standards and promote its industrial development. The lawmakers called for the invocation of The Export Control Reform Act of 2018 to require export licenses for U.S. individuals and companies interacting with China and transferring expertise via RISC-V.

The U.S. and G7 will invest $600 billion into the Lobito corridor, a railway project to connect mines with critical minerals in the Democratic Republic of the Congo (DRC) and Zambia to an Atlantic Ocean port in Angola. China has previously invested in similar networks of rail lines and ports in the region dating back to the 1970s. A Silicon Valley startup with connections to Bill Gates and Sam Altman is working to convert a large copper deposit into a mine to feed the project. Copper and other critical minerals are essential for batteries and renewable energy technologies for the United States’ green transition.

China’s largest memory-chip maker, Yangtze Memory Technologies Corp. (YMTC), has been forced to secure billions of dollars in new capital after the expenditure of $7 billion in funding over the past year as it sought to navigate the tough constraints imposed by the United States. The company was added to a trade blacklist last December and blocked from procuring U.S. equipment to produce chips. The search for replacement equipment and the development of new components and essential chipmaking tools depleted most of YMTC’s cash.

The U.S. and China will hold nuclear arms control talks this week with low-level officials following a report from the Pentagon which warned that China is expanding its arsenal of nuclear weapons at a pace much faster than initially anticipated. The talks are not meant to limit China’s arsenal of weapons, but rather provide transparency into China’s objectives.

The Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on 130 individuals and companies from China, Turkey, and the U.A.E. in an effort to restrict Russia’s access to supplies and equipment that facilitate its invasion of Ukraine. The sanctions target firms and individuals suspected of aiding Moscow in acquiring equipment for the battlefield. The State Department has also imposed diplomatic sanctions that specifically impact Russian energy production and the metals and mining sector.

The U.S. and China joined around 2 dozen countries committed to collaborate on AI standards by signing onto the Bletchley Declaration during the AI Safety Summit in the United Kingdom. The declaration stated, “We resolve to work together in an inclusive manner to ensure human-centric, trustworthy and responsible AI that is safe, and supports the good of all through existing international fora and other relevant initiatives, to promote cooperation to address the broad range of risks posed by AI.” During the summit, Chinese Vice Minister of Science and Technology Wu Zhaohui promoted China’s Global Artificial Intelligence Governance Initiative which, according to Wu, advocates for “people centeredness, intelligence for good…equality and mutual benefit.” Given the United States’ efforts to restrict China’s AI advancement through semiconductor export controls, it is unclear for how long the U.S. and China will pledge to work together on AI initiatives.

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