China and the World, Talking Point

Establishing the guard rails

What did the debut Sino-US presidential summit of the Biden era achieve?

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Lacking the personal touch: President Biden spoke ‘virtually’ to President Xi late into the night in Washington

Ronald Reagan first met Deng Xiaoping in Beijing in April 1984 – almost exactly 39 months after the former Hollywood star first became US president. There was a delay because Washington and Beijing had laboured for months over the details of the third and final Joint Communiqué (that has since served as a cornerstone of the China-US relationship).

Ever since that time every US president has met with the top Chinese leader during his first year in office, and vice versa. Diplomats from both sides have explained that such meetings play a crucial role, setting the stage for the leaders to get a personal feel for each other. It sets the tone for a bilateral relationship that has grown into the world’s most important and most complicated. The face-to-face rapport between the two leaders can be vital when things go awry.

President Xi Jinping has himself stuck to the tradition since taking power and even adopted a more American style early on in his tenure when he eschewed the highly conservative Chinese diplomatic protocols of prior summits for a greater informality. For instance in June 2013 the then newly installed Chinese president took off his tie and started talks with Barack Obama over a leisurely stroll in California’s Rancho Mirage. Four years later Xi travelled to the US again, this time spending some unscripted time at Donald Trump’s Mar-a-Lago resort in Florida (where America’s least conventional president confided to Xi over the soup course that he’d just rained 50 missiles down on Syria).

However, an intenser focus on personal diplomacy vis-à-vis ‘the Donald’ – where Beijing lavished flattery on him and even granted his daughter a bunch of useful trademarks – didn’t work, as Trump slapped hefty tariffs on Chinese goods less than 12 months after hosting China’s first couple in his Florida mansion. The worsening ties between the countries then spilled over from the Republican administration to the Democrat one that was inaugurated this January. The diplomatic freeze – alongside Covid-19 travel restrictions – meant Xi found little time for summitry with his “old friend” (see WiC518) Joe Biden. A physical meeting between the duo has proven elusive in the 12 months since Biden’s election last November as US president. However, diplomats scraped together a ‘virtual’ meeting between their leaders this week. So, how – if at all – has the three-and-a-half hour video call changed relations between the world’s two biggest economies?

Recapping an eventful year for bilateral ties…

In the opening days of 2021 the world was closer to a catastrophic military conflict than most realised. That became evident more recently when Mark Milley, chairman of the joint chiefs of staff, revealed to author Carl Woodward (and subsequently to Congress) that he found it necessary to call his Chinese PLA counterpart twice in the waning months of Trump’s presidency, including once in early January, to reassure Beijing that the US wouldn’t attack China.

There were hopes that Biden could at least reopen channels of communication between the two governments, which had largely broken down in the lead-up to the transition of power in Washington (with Beijing particularly vexed by the confrontational activities of Trump’s hawkish Secretary of State Mike Pompeo).

That did not happen: diplomatic channels remained frozen and dialogue was icy. Indeed, in-person, high-level talks between the two sides have become even rarer. The first official meeting between the Biden administration and China ended with both sides trading sharp rebukes in the suitably cold climes of Alaska in March.

The two sides’ next in-person interaction came in late July when Deputy Secretary of State Wendy Sherman visited Tianjin and met Chinese Foreign Minister Wang Yi – just two days before Wang’s scheduled meeting with Afghanistan’s Taliban representatives in the same Chinese city.

Sherman told Wang that Washington might need Beijing’s help in the unravelling Afghan political landscape – with the Americans’ having timetabled a hasty withdrawal from Kabul (see WiC552). But US solicitations for assistance got zero traction with the Chinese side. During their talks, Wang underlined for Sherman three “bottom lines” that Beijing saw as vital for preventing Sino-US relations from unravelling. Foremost among these was that the US must not challenge or “even attempt to subvert” China’s “development path and system”.

Specifically Sherman brought home two ‘to-do lists’ from China (namely the “List of US Wrongdoings that Must Stop” and the “List of Key Individual Cases that China Has Concerns Over”) which, according to the Xinhua news agency, included an end to US visa restrictions that made life more difficult for Chinese students as well as Chinese journalists (and also to drop visa bans on members of the country’s ruling Communist Party). Beijing also demanded that Washington abandon a variety of Trump-era sanctions including high tariffs on Chinese exports and a tech blockade imposed on exports of US semiconductor parts and equipment. It also insisted on the unconditional release of Huawei’s CFO Meng Wanzhou (held in Vancouver at the time in a legal dispute over whether she should be extradited to the US).

All this coincided with a nuanced shift in the mood music too. In the early days of the Biden administration many discussions about China focused on areas like criticising the Chinese government on its treatment of local populations in Xinjiang and other human rights issues. But a foreign policy reset button seemed to be pressed in the summer as weeks of televised rolling news covered America’s less than ideal exit from its two-decade military presence in Afghanistan. The anger and frustration of American allies over the handling of the pullout, as well as the epic failures of US military and political intelligence – which badly underestimated the speed of the Taliban advance and the former Afghan government’s collapse – put the White House onto the defensive. This event appeared to mark an unexpected turning point in the tone of China-US relations. Partly this was because of the setback to US prestige that the scrambled retreat symbolised; but also because of the messages sent to both sides of the Taiwan Strait in respect to Washington’s long term reliability as a protector (see WiC552). In the dynamic of Big Power politics, China’s hand seemed no weaker after the fall of Kabul – and possibly stronger – while the US emerged more chastened

According to Chinese media reports, Biden took the initiative to call Xi in September, the second time he’d done so since phoning his Chinese counterpart on the eve of the Chinese New Year in February (when Xi also congratulated Biden on taking office). During September’s hour-long dialogue, Biden stressed that his administration was prepared to have “constructive discussions” to identify priority areas where cooperation was possible, and get bilateral relations back on track.

At the same time diplomatic interactions picked up too. Qin Gang was named China’s new ambassador to the US in late July. Last month Biden nominated Nicholas Burns as the US ambassador to China after that key post was left vacant for nearly a year (prior to that Chinese media had suggested that the vacancy was akin to an ambassadorial recall). Trade talks between the two sides have also resumed and there were even reports that Treasury Secretary Janet Yellen was weighing up a trip to China.

National Security Advisor Jake Sullivan met with top Chinese diplomat Yang Jiechi again in Zurich last month. Following a six-hour meeting, news soon surfaced that both sides had agreed on a leaders’ summit that would take place before year-end.

Which side wanted a face-to-face summit more?

Both Xi and Biden might want to showcase to their own supporters and political opponents at home that they are able to engage with each other in a constructive way.

For instance, according to a recent report by the Americans for Financial Reform, financial service firms and trade associations spent a record $2.9 billion on political donations and lobbying in the 2019-2020 election cycle, with the sector donating 2.5 times more to Biden than Trump. This group of Biden’s backers has immense business interests in the Chinese financial market, which Beijing has promised to open up for more foreign investment.

Biden also has the midterm elections to worry about. His Democratic Party has just suffered a shock loss in the governor’s race in Virginia. The US president’s approval ratings also dipped into the mid-to-low 40s as inflation raced to its highest level in 30 years. According to a research report by China Everbright Securities published earlier this month, Biden was under pressure to bring back something positive from the bargaining table with China to enhance the Democrats’ election prospects.

On the other hand, China has also entered a sensitive political period as the ruling Party is set to hold its 20th National Party Congress, a five-yearly gathering, in the second half of 2022 to pick a new generation of Beijing leaders. Nevertheless if the general view held by China observers is accurate, Xi’s path to a potentially indefinite extension of his leadership role was secured after the Party’s Central Committee passed a resolution last week enshrining him as a historically vital figure to the achievements of the CPC (Communist Party of China) over its 100-year history (see WiC555).

Reportedly Washington was angling for a Biden-Xi summit either at the G20 meeting in Rome in late October or, in an even better scenario, on the sidelines of the United Nations climate change conference in Glasgow earlier this month.

But Xi has not travelled abroad since a state visit to Myanmar in January 2020. Covid-19 offers a reason for Xi’s lack of diplomatic jetsetting although there are also suggestions that the Chinese leader wants to stay close to Beijing’s power centre during a politically sensitive time.

Apparently a compromise was brokered at the end of Sullivan and Yang’s meeting, with Xi agreeing to connect with Biden in cyberspace. This kept intact a tradition that leaders from the two countries would meet each other within 12 months of a US president taking office.

Has Washington made any concessions to make the summit happen?

This is the first ever virtual summit between the leaders of the two countries. Unlike Xi’s first meetings with Obama and Trump, when he took the initiative to push for visits to his American counterparts, this time it is Biden who seems to have taken the extra steps to make a summit happen.

The video conference started at 8:46am Beijing time and when it concluded after 3.5 hours, Washington was approaching midnight.

“The meeting was arranged at the start of the day for us [China],” wrote Niaodanqin, a WeChat blogger affiliated with Xinhua. “The US side obviously needed to work until midnight. So you could tell if the US was proactive or reactive in arranging the meeting.”

Looking back at those Chinese ‘wish lists’ relayed to Sherman back in July in Tianjin, diplomacy-focused bloggers such as Niaodanqin also pointed out that Washington had actually met some of Beijing’s demands.

In September Huawei’s CFO Meng was released and allowed to return to China following almost three years of house arrest in Vancouver. Reportedly Washington has already removed some visa restrictions on Chinese students applying to American universities as well. The US government also reported this week there was progress in talks with Chinese authorities on improving working conditions and access for journalists working on each other’s soil.

And in early October, the office of the US Trade Representative (USTR) announced it plans to lift tariffs on 549 types of Chinese imports including industrial components, thermostats and medical supplies. Last month Reuters reported that Huawei and SMIC have continued to receive billions of dollars worth of licences from the Biden administration to buy US tech parts and services despite their being on various blacklists.

Yet perhaps the biggest US concession is one that appears to echo China’s ‘three bottom lines” that Foreign Minister Wang trumpeted in Tianjin, i.e. any attempts to subvert China’s “system”. In an interview with CNN days before the virtual summit, Jake Sullivan said one of the errors of previous administrations had been a view that the US could achieve a fundamental transformation of the Chinese “system”. That’s not Washington’s objective now. Instead, the goal of current policy is to create circumstances in which the two major powers are going to co-exist in an international system for the foreseeable future, he explained.

So what was discussed at the virtual meeting?

China’s state media described the meeting as “frank, constructive, substantive and fruitful” – which ranks as very high praise in Chinese diplo-speak – although the phrase “no breakthroughs” dominated US media headlines from outlets such as the New York Times and CNN.

“We were not expecting a breakthrough. There were none to report,” a senior official told reporters in a White House briefing after the meeting.

In the first 10 minutes of the meeting Biden told Xi he saw their responsibility as leaders to ensure that the competition between the two countries did not veer into conflict. Biden also emphasised the need to establish some “common sense guardrails” so that both sides were clear where they disagree and to facilitate a working relationship in areas where interests intersect.

Meanwhile, Xi, according to Xinhua, insisted that China-US relations should be defined by principles such as mutual respect, co-existence and win-win cooperation (no surprise here: this is the ‘diplomatic holy trinity’ of Chinese phraseology). Whether it is setting out rules for competition or installing guardrails for a relationship, the Chinese side argued for consultation on an equal footing, rather than one side imposing conditions on the other. In other words, this was a further push for acknowledgement of a new ‘G2’ encompassing the two superpowers (the drive for this began under Xi’s predecessor Hu Jintao but till now was disdained by the US State Department).

It came as a further elaboration after Yang’s outburst in Alaska when he rebuked his American counterparts that they were not qualified to speak to China from a “position of strength”. It also echoed with the so-called pingshi diplomacy that has been gaining traction. The buzzword was inspired by Xi’s remark ahead of the Alaska meeting that China’s younger generation – unlike his own – could now “view the world on level terms” (aka pingshi, which can also serve as a pun on Xi’s name).

That’s why CNN described the exchange as a “significant breakthrough” for Beijing.

What could China offer Biden in return?

According to Hong Kong’s Singtao Daily, Beijing also made a number of concessions ahead of the meeting. The National People’s Congress was about to enact an anti-sanction law in Hong Kong in August – that many US businesses feared – although that plan was shelved indefinitely without much explanation.

If Biden’s administration had in fact made a number of concessions to make a summit happen, it didn’t want to spend 3.5 late-night hours in idle glad-handing – it had a bargaining agenda of its own.

Indeed, from images made available by both countries, Biden had in front of him a large file of documents (Xi had a cup of tea and a cup of coffee as well) which Chinese bloggers speculated contained Washington’s own ‘wish list’.

One item on that list could be China’s continued buying of US treasuries, some speculated. China remains the second largest foreign holder of US bonds after Japan, although US government data showed that its holding had dropped to $1.05 trillion in August, the lowest level since 2010.

Since the 2008 global credit crisis the Chinese authorities have been increasingly sceptical about investing in US sovereign bonds. Yet one group of items China is likely to purchase in more abundance are US commodities. The Phase One trade deal Beijing agreed with Trump’s administration in early 2020 also called for China to boost purchases of US exports by $200 billion by the end of this year. According to Washington the Chinese side has lagged far behind in meeting this target (Beijing blames the pandemic for this). The Chinese to be making efforts to catch up on the schedule. In a significant but less publicised deal announced just days before the summit, China signed off a 20-year contract to buy four million tonnes annually of liquefied natural gas from the US.

Then, of course, after joining hands with the US in delivering a last-minute, unexpected deal at the climate conference in Glasgow this month, China has also positioned itself as one of the two nations which will have an influential say in deciding the world’s future energy mix.

As such, it’s not too surprising that news emerged that Biden and Xi this week discussed the merits of releasing oil from their strategic reserves to ensure stability in global energy markets.

In doing so, China might be offering another concession to Biden – helping to hold down US petrol pump prices which have contributed to the surging inflation rate that is threatening to undermine the US president’s popularity at home. Thanks to rising consumer prices and port logjams, the Global Times reported this month that American families are set to “greet the most expensive Christmas” in recent memory. Somewhat unexpectedly US banks and business groups have even lobbied Washington to lift tariffs on Chinese goods as a way to curb runaway inflation.

According to Xinhua, the topic of keeping global industrial supply chains stable was discussed at the summit, although both sides have offered little detail on the outcome.

Biden has promised more details in the next two weeks, as he told reporters that both sides have set up working groups on a “whole range of issues” (reportedly one of those is about curbing nuclear weapons, which China has been accumulating at a rapid clip that has unnerved US generals in recent months).

What about Taiwan?

The mainland Chinese press claimed after the meeting that very little oxygen had been wasted on discussing Taiwan. That’s because Beijing had insisted in advance that the status of the island is one of its ‘bottom lines’, which it regards as non-negotiable.

CNN, on the other hand, said the issue had consumed “the most time of any” during the summit.

Xi had warned his counterpart of “playing with fire” over Taiwan and that China would be compelled to take “resolute measures” should forces for Taiwan independence “cross the red line”.

According to Xinhua’s account, Biden reaffirmed the US government’s long-standing One-China Policy, while also stating that the US does not support Taiwanese independence. CNN reported Biden as qualifying this with the caveat that he is also against a change to the status quo in the Taiwan Strait.

It will be interesting to see if Taiwan’s leader Tsai Ing-wen is now invited to the ‘Leaders’ Summit for Democracy’ that Biden is arranging for the end of this year. That would be provocative – but many now take comfort that a military conflict in the Taiwan Strait is less likely in the near future within the “guard rails” that were this week shaped by the Xi-Biden virtual meeting.


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