EXPANDING TIES IN BEIJING’S BACKYARD: Joe Biden is wrapping up his second day in Vietnam as the White House seizes on China’s financial slowdown and military aggression to frame the U.S. as a more reliable economic partner for countries in the Indo-Pacific. “I don’t want to contain China. I just want to make sure that we have a relationship with China that is on the up and up, squared away,” Biden said at a news conference in Hanoi on Sunday, where he accused Beijing of "beginning to change some of the rules of the game" when it came to international trade. The American president joined a meeting with CEOs in Vietnam on Monday, alongside Prime Minister Phạm Minh Chính and spoke with President Võ Văn Thưởng, according to the White House schedule. Biden traveled to the region over the weekend to formally elevate the countries’ diplomatic relationship. The new partnership between Vietnam and Washington is part of the administration's efforts "to demonstrate to our Indo-Pacific partners and to the world, the United States is a Pacific nation and we're not going anywhere,” Biden said at a news conference following a meeting with Nguyen Phu Trong, head of Vietnam's Communist Party. Biden also pledged deeper ties with India in a joint statement with Prime Minister Narendra Modi on Friday, and used this weekend’s G20 summit to discuss his request to Congress to raise the lending power of the World Bank and the International Monetary Fund in a bid to counter China’s influence over emerging markets. China-threat looms: But while U.S. officials have openly stressed the Asia sojourn was about rallying allies to work together on climate change and development on a shifting global economy, they privately hinted that better ties with New Delhi and Hanoi would boost America’s regional position, per our Alex Ward. Deliverables clinched: The president inked deals with Vietnam on semiconductors and critical minerals on Sunday, and elevated Washington’s standing to the highest level shared by China and Russia in Vietnam’s hierarchy of diplomatic relations. The announcements are bound to elicit a response from China, which opposes any show of closer ties between Washington and countries in the region. Biden said his Chinese counterpart Xi Jinping “has his hands full right now” with a difficult economic problem and said, “I don’t think it’s going to cause China to invade Taiwan, in fact maybe the opposite, probably doesn’t have the same capacity as it had before.” Both sides: Top Chinese officials, possibly including Xi, are expected in Vietnam in the coming days or weeks, per Reuters, as the country angles to maintain its critical economic relationship with China while deepening trade with Washington. Hanoi has shared U.S. concerns about China’s growing aggressiveness in the South China Sea. But Vietnam is also secretly planning to buy Russian arms, a move that would violate Western sanctions, according to a report from The New York Times. U.S. SEEKING INFO ON HUAWEI CHIP: The Commerce Department’s Bureau of Industry and Security is seeking more information about a China-developed chip powering Huawei's latest flagship smartphone that Republican lawmakers warn could violate U.S. trade rules. “We are working to obtain more information on the character and composition of the purported 7nm chip,” a Commerce official told Morning Trade on Friday. The statement came as Huawei launched pre-sales of the Mate 60 Pro smartphone, which is capable of 5G technology and rivals the world’s most advanced devices, including the latest iPhones. China hailed the phone as a signal of Beijing’s rapidly advancing technology sector, but Western officials and analysts remain skeptical, and contend the device likely relied on American technology, perhaps in violation of U.S. export controls. House Select Committee on the Chinese Communist Party Chair Mike Gallagher (R-Wisc.) called to end all technology exports to Huawei and China's top semiconductor firm, and Rep. Michael McCaul (R-Texas) said at a briefing at the U.S. embassy in Hague that it looks like Semiconductor Manufacturing International Corp had violated U.S. sanctions. The U.S. placed Huawei on a trade blacklist in 2019 over concerns the company could use its technology to spy for the Chinese government. But the U.S. granted licenses to allow American firms to sell to the company up until January 2023, including Qualcomm, which received permission to sell 4G smartphone chips to Huawei in 2020. “Let’s be clear: export controls are just one tool in the U.S. government’s toolbox to address the national security threats presented by the PRC. The restrictions in place since 2019 have knocked Huawei down and forced it to reinvent itself — at a substantial cost to the PRC government,” the Commerce official added. What to watch: The House Select Committee on the Chinese Communist Party is holding a hearing tomorrow that will include testimony from former chair of the Securities and Exchange Commission Jay Clayton, as members escalates scrutiny over how U.S. investment in China could undermine national security. FIFTH IPEF ROUND UNDERWAY: Commerce Secretary Gina Raimondo has been clear she would like to reach “Clean Economy” and “Fair Economy” trade agreements as part of talks on the proposed Indo-Pacific Economic Framework by the time Biden hosts APEC leaders in November for the group’s annual summit. Her department has already concluded a supply chain agreement with the 13 other IPEF countries that was published last week. As IPEF negotiators meet for a fifth round of talks this week in Bangkok, Thailand, it’s less clear what portions of the USTR-led negotiations on the broad “trade” pillar can be completed. But USTR spokesperson Angela Perez said the agency was “working hard to make meaningful progress and tangible results in our IPEF negotiations with the APEC summit in mind.”
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