U.S.-China relations are 'still deteriorating,' says former U.S. ambassador

  • U.S. relations with Beijing are getting worse and have not "reset" under President Joe Biden in the way that many had previously expected, said Max Baucus, a former American ambassador to China.
  • Baucus said Biden's policies on China are "just as strong as Trump's."
  • The former ambassador said the risk of a U.S.-China military clash over Taiwan is increasing, but he doesn't think the two countries would go to war.

U.S.-China relations are getting worse and have not "reset" under President Joe Biden in the way that many had previously expected, said Max Baucus, a former American ambassador to China.

"The situation unfortunately is generally still deteriorating," Baucus told CNBC's "Squawk Box Asia" on Friday.

"I think a lot of people thought with the election of Joe Biden, that might end the free fall, that might be the bottom and things would slowly come back to normal — but that has not really happened," he added.

Tensions between the U.S. and China grew rapidly under former U.S. President Donald Trump, who slapped higher tariffs on Chinese goods and placed some Chinese companies on a blacklist that limit their business dealings in the U.S.  

Baucus, who was appointed ambassador to China by President Barack Obama in 2014, told CNBC in October that U.S.-China relations will "see a bit of a reset" if Biden became president. But he acknowledged Friday that he was wrong and Biden's policies on China are "just as strong as Trump's."

Under Biden, Washington — along with its allies in Europe, Canada and the U.K. — slapped sanctions on Chinese officials for alleged human rights abuses against ethnic minorities in the Northwestern Xinjiang region. The U.S. president also ordered a closer review of the origins of the Covid-19 pandemic and expanded restrictions on American investments in certain Chinese companies.

Facing pressure from the U.S. and other countries, China on Thursday passed a new law to counter foreign sanctions.

U.S.-China clash over Taiwan

One area where U.S.-China tensions are playing out is Taiwan, a democratic and self-ruled island in North Asia.

The Chinese Communist Party government in Beijing claims Taiwan as a runaway province that must one day be reunited with the mainland — using force if necessary. The CCP has never ruled Taiwan.

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Trump broke with decades of American foreign policy by moving the U.S. closer to Taiwan during his term. The Biden administration has continued on that trajectory, with the State Department issuing new guidelines in April to enable U.S. officials to meet more freely with their Taiwanese counterparts.

Such moves anger Beijing because the CCP views Taiwan as having no rights to conduct diplomacy of its own.

Baucus said the risk of a U.S.-China military clash over Taiwan is increasing but he doesn't think the two sides would go to war.

"I don't think Xi Jinping wants war, he knows that if he tries to militarily invade Taiwan there's a big risk the United States will retaliate," said the former ambassador, referring to China's president.

"I think frankly, the risk, the likelihood is higher that the U.S. will retaliate now than it might have been a couple or three years ago because tensions between the two countries, the U.S. and China, (are) just so great," Baucus added.

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