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US-China trade

Biden-Xi summit leaves the big question unanswered


Published 16 November 2021

The open question for the broader relationship is whether the US and China can constructively manage the slow-motion collision that is now unfolding between their very different worldviews. Responsibly managing these differences to ameliorate the fallout is in the best interest of both countries, and will be the defining challenge in bilateral relations for the foreseeable future.

US President Joseph Biden and Chinese President Xi Jinping have just concluded their much-anticipated virtual summit. Specific outcomes were not expected, and none appear to have emerged. Both sides had telegraphed before the meeting that the primary purpose was to establish a more positive general tone in the overall bilateral relationship. While the two countries had reached a surprise agreement to cooperate on climate issues at last week’s COP26 conference in Glasgow, relations have been mostly strained on issues ranging from trade and technology to human rights and sensitive territorial issues in the South China Sea.

As initial readouts from the summit, both official and unofficial, are dribbled out, we can be sure of two things: both leaders brought dramatically different perspectives to the summit, and the most important question for US-China relations remains unanswered.

China’s perspective: our time has come

President Xi entered the summit firmly believing that the US is a fading super-power, destined to recede as China inevitably rises. In Xi’s view, China’s time has arrived, and it is no longer necessary to hide power and bide time, as the late Deng Xiaoping once counseled. Under the “great, glorious, and correct” guidance of the Chinese Communist Party, China is reasserting its historical preeminence. Accordingly, the US should sensibly recognize this reality and refrain from attempting to “block” China’s rise. Bilateral summits are an opportunity to impress upon the US that the old power dynamic between the countries has expired.

China no longer sees the need to accept lectures from the United States on any topic and Xi undoubtedly did not accept any from Biden. This reflects a growing confidence in China’s own capabilities and in particular its ability to project influence and shape outcomes on global economic, technology, and security issues. It also reflects a strategic assessment that the ability of the US to do the same has begun to irreversibly decline.

This worldview began to gather steam in China’s policy circles in the aftermath of the Global Financial Crisis, which seemed to reveal deep flaws in the US economic model, along with a fair amount of simple incompetence. As one Chinese official famously said at the time:  the teacher has made a few mistakes.

More recent developments, ranging from dysfunction in the US political system, deepening societal divisions, a botched response to the pandemic, and the disastrous withdrawal from Afghanistan, have only strengthened perceptions about American decline.

In the earlier stages of its development, China’s policy makers felt that they had a tremendous amount to learn from the US. They also felt that China lacked the capacity to seriously challenge the primacy of US doctrines and policy preferences. Today, neither of those things are true. That represents a sea-change in the relationship and an important message for Xi to communicate to Biden during the summit.

US perspective: our eyes are now open

President Biden sees things quite differently. He subscribes to the growing consensus that the US was “asleep at the switch” for the past 20 years, naively assuming that deepening trade and investment integration would inevitably lead China to become a “responsible stakeholder” in the US-led system. The hope, if not expectation, was that China would ultimately become “just like the US.”

It is now acknowledged that, quite to the contrary, bringing China into the global economy has simply strengthened the legitimacy of the CCP and led to the further entrenchment of China’s economic and governance models. Moreover, China’s success has empowered and emboldened China’s leaders in provocative ways and strengthened the appeal of China’s system (although not China itself) globally.

And rather than taking a place in the US-led system, China is constructing parallel systems which reflect China’s economic and governance philosophies. These developments are seen in Washington as antithetical to US interests. In light of how China’s motivations and intentions are now understood, Biden believes that, when needed, the US must be prepared to more forcefully confront and challenge China. As Biden told Xi in his opening remarks, the US will always “stand up for our interests and values”.

In fact, Biden has been remarkably blunt in stating that he views the US-China relationship as a contest between democratic values and authoritarian values – a contest which he believes the democratic world can, must, and will win. Cooperation with China on some issues will be necessary and beneficial, and these areas were understandably stressed during the summit. The countries need to face common challenges “together” and improve “communication and cooperation,” said Xi. But intense strategic competition in other areas is inevitable. This is a recurring theme not only across trade and technology issues. It also animates US domestic policies on everything from the pandemic to infrastructure and education, all of which Biden positions as essential in order to win the competition with China.

But trade will clearly be near the top of the bilateral agenda. Both sides are likely looking for an elegant way to move past the Phase One agreement negotiated under the Trump administration. That agreement has failed to appreciably advance the interests of either side, but it can’t simply be ignored. There must be a resolution that’s palatable to both sides. The Biden team has “boxed themselves in” somewhat by saying they intend to hold China’s feet to the fire on implementation. At the same time, they recognize that the purchase commitments are never going to happen and that the tariffs are harming at least some segments of the US economy. China would be happy to see the whole thing disappear but will not pay too much to make it happen. The real talks on this issue are yet to commence.

The big, open question

The open question for the broader relationship is whether the US and China can constructively manage the slow-motion collision that is now unfolding between their very different worldviews. Neither country is going to disappear. Neither country will accede to the other’s view. The prudent path forward would be to find plausible ways for each side’s divergent narratives to coexist. This is perhaps what Biden had in mind when he referred to the need for “common sense guardrails” in the relationship.

It will not be an entirely comfortable process. Granted, engagement and even constructive cooperation in some areas will take place and the bilateral trade and investment relationship cannot and will not be fully decoupled. But hard-edged, irreconcilable differences are embedded in each side’s view of the other. These cannot be wished away. They can however be responsibly managed in a way that ameliorates the fallout. That is in the best interests of both countries, and it will be the defining challenge in US-China relations for the foreseeable future. Whether the Biden-Xi summit moved us any closer to meeting that challenge, however, remains to be seen.

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Author

Stephen Olson

Stephen Olson is a Senior Research Fellow at the Hinrich Foundation with over 30 years of international trade experience. Previously, he was an international trade negotiator in Washington DC and served on the US negotiating team for NAFTA negotiations.

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