House China Select Committee Chairman Mike Gallagher (R-WI) said it's "troubling" and "scandalous" that President Joe Biden reportedly held back sanctions from China after the spy balloon was discovered over U.S. airspace.
“I think it’s incredibly troubling. Time and time again, we think that by being nice to China, they’re somehow going to moderate their behavior…so I thought it was pretty scandalous,” Gallagher said on a conference call.
According to Reuters, some officials thought the discovery of the spy balloon would unite and strengthen the government bureaucracy to sanction China, but instead the State Department avoided sanctions, saying it didn't want to damage the U.S.-China relationship.
Rick Waters, deputy assistant secretary of State for China and Taiwan, who leads the Office of China Coordination (“China House”) policy division, said in a February 6 email to staff: “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.”
Morale at "China House" has been damaged by the delays in planned sanctions and lack of response to the spy balloon, sources told Reuters.
Planned sanctions had included export licensing rules for telecom equipment maker Huawei and sanctions against Chinese officials for abuses of Uyghurs. There may have been a lack of coordination on the sanctions because Secretary of State Anthony Blinken had delegated China policy duties to Deputy Secretary of State Wendy Sherman, who subsequently decided to leave the administration.