The US and China disagree on most things these days. But both have a strong interest in working together where they can and avoiding open conflict. Despite intense economic and trade disputes, there remains a deep interdependence between the Chinese and US economies and societies. China is still the largest supplier to the US of imports of goods and the third largest market for exports of goods from the US.
And despite increasing restrictions being applied by the US government, the US remains a very important destination for China’s outbound investment, helping Chinese companies to acquire technology, know-how and brands and penetrate the US markets.
President Xi Jinping’s ascension to China’s leadership in 2012/13 marked a much more aggressive Chinese foreign policy, manifested in a series of initiatives and actions: the occupation and militarization of the South China Sea. To be intimidation of the Japanese administration of the Senkaku/Diaoyu Islands. The country’s increasing pressure on Taiwan and Beijing’s impatience for Taiwan’s unification with the People’s Republic. The violation of the “one country, two systems” principle for Hong Kong’s governance. The state sponsored cyber intrusions. The huge investments in military hardware, such as the recently tested nuclear capable hypersonic missile.
Reshaping the Old World Order
China has also taken several initiatives to reshape the world order in line with its interests, such as through the establishment of the Asian Infrastructure Investment Bank, the New Development Bank, the Belt and Road Initiative, the BRICS Summit, the 17+ 1 initiative for cooperation between China and Central and Eastern European countries, and the expansion of the Shanghai Cooperation Organization.
President Xi has made it clear that he wants to drive the US out of East Asia, as when he said:it’s for the people of asia to settle the affairs of Asia, solve the problems of Asia and maintain the security of Asia.And he sings that regularly the east rises and the west falls.
America’s nascent loss of confidence in its strategic engagement with China is evident in its concerns about economic policies such as Made in China 2025 (which attempted to take over US global technology leadership), widespread intellectual property theft, forced technology transfer, anti-competitive subsidies, and increasing discrimination against US companies in China.
These factors led former US President Donald Trump to label China as a strategic “competitor” in his… first national security strategy in 2017. It also led to former President Trump launching a “trade war,” primarily through import tariffs from China, to pressure Beijing to change its economic and trade practices. The trade war has turned into technological competition as Washington sought to limit Chinese access to US technologies, especially those of “dual use” (that is, civilian and military use). US sanctions against Huawei have virtually crippled the tech giant.
We are now in a new type of Cold War, without a clear framework for managing relationships and resolving disputes.
Economic and security interests are closely intertwined
To resolve these economic and trade issues, the United States and China signed an economic and trade agreement in January 2020 (“Phase One Agreement”). This requires structural reforms and other changes in China’s economic and trade regime.
In 2021, however, economic policy has reversed, with increasing state control over the private sector and the economy in general, and a shift towards a more socialist direction, with its new ‘shared wealth’ policies. The Phase One agreement also requires significant additional purchases of U.S. goods and services in the coming years. But China’s commitments are largely unfulfilled at this stage.
While business ties between the US and China have been mutually beneficial, the security dimensions of the economic relationship have come into sharper focus. The US and China Economic and Security Assessment Committee 2021 report to Congress stated, “Chinese policymakers seek foreign capital and fund managers as they work to make China’s capital markets serve as a means of financing the Chinese Communist Party’s technological development goals and other policy goals.”
While Congress may want to clip Wall Street’s wings, decoupling is difficult, especially in light of the financial sector’s influence on US politics.
President Biden’s Focus on Multilateralism
President Joe Biden promised to continue with former President Trump’s hard line against China. If there is one thing Republicans, Democrats and the US establishment agree on, it is that China is a strategic competitor to the US and must be confronted.
But President Biden differs from former President Trump in that he values multilateral organizations, some of which he has joined. He also appreciates America’s allies and partners and their cooperation through “minilateral initiatives” to rebalance China.
An example of such an initiative is AUKUS, an “enhanced trilateral security partnership” launched in September 2021 with much fanfare by President Biden and the leaders of Australia and the UK AUKUS, will support Australia in acquiring nuclear-powered submarines and will include deeper information and technology sharing. This is the clekey signals of the US commitment to the Indo-Pacific. According to Kurt CampbellPresident Biden’s “Asian Czar” AUKUS is causing “heartburn” in President Xi Jinping.
The Four-way security dialog (the “Quad”) is another minilateral initiative that aims to balance and counter China’s assertive behavior and protect the rules-based regional order. President Biden seized on the informal grouping as a ready-made tool for democratic countries to work together. He started the first-ever Quad Summit, which was held virtually in March this year, and the second summit took place in person on September 24, 2021.
Unfortunately, President Biden’s impressive political diplomacy in the Indo-Pacific has not been matched by economic diplomacy.
The US is not immediately likely to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade deal once led by the Obama administration from which Trump withdrew the US. mega trade agreement, the Regional Comprehensive Economic Partnership, of which China is a member.
In short, the US remains on the sidelines of new trade deals in the Indo-Pacific, a region that opposes the protectionist trend of the rest of the world.
Have Biden/Xi Mini Summit Presidents Achieved Anything?
On November 15, 2021, Presidents Biden and Xi held a virtual meeting lasting more than three hours, their first formal meeting since President Biden took office. In his opening speechPresident Biden said it was their responsibility “to ensure that competition between our countries does not turn into conflict.” President Xi called President Biden an “old friend” and said that “China and the United States should respect each other, coexist in peace and pursue a win-win cooperation.”
But these talks have not yielded any major breakthroughs on the thorny issues that separate the countries. Nevertheless, it is positive that they can have a civil, open and transparent meeting. This could lay the groundwork for “managed strategic competition” between the two countries — a sort of stalemate that recognizes neither side is willing to compromise. In other words, we are now in a new type of Cold War, without a clear framework for managing relationships and resolving disputes.
Both countries are likely to turn inward by 2022
Looking ahead to 2022, Xi and Biden have every reason to focus more on domestic politics than on foreign affairs. But in the short period since the Biden/Xi summit, the US has made two decisions that have fueled US-China relations.
The US has announced that it will not send an official delegation to the 2022 Winter Olympics, which will be held in Beijing in February. “US diplomatic or official representation would treat these games as business as usual in the face of the PRCs” [People’s Republic of China’s] blatant human rights violations and atrocities in Xinjiang, and we just can’t do that,” said White House press secretary Jen Psaki. However, Team USA athletes will be free to participate. Beijing has responded strongly, with the foreign affairs spokesman threatening “resolute countermeasures”.
Furthermore, President Biden has invited Taiwan to his “Summit for Democracy,” a virtual meeting to be held on December 9-10 for government, civil society and private sector leaders from more than 100 countries, but to which neither China nor Russia participates. invited. Taiwan will reportedly be represented by Hsiao Bi-khim, the de facto ambassador to the US, and Digital Affairs Minister Audrey Tang. Not surprisingly, the Chinese government has accused Joe Biden of “a mistake” in inviting Taiwan.
It would be nice to look forward to a return to relative stability in US-China relations in 2021. However, as recent events have shown, anything can happen in this highly unstable and fragile relationship. But the fact that leaders are talking to each other, in a civilized and diplomatic way, gives hope that events don’t get out of hand.