President Joe Biden and Chinese leader Xi Jinping recently met for an important four-hour discussion, focusing on various areas of concern in an effort to prevent their rivalry from escalating into an all-out conflict. Their face-to-face meeting, the first in a year, was seen as an opportunity to reset their relationship, which has faced recent challenges.
Analysts have highlighted several incidents that strained the relationship, including the flying of Chinese surveillance balloons over the U.S., China’s military exercises near Taiwan following Speaker Nancy Pelosi’s visit to the self-ruled island, and the U.S.’s tightening restrictions on China’s access to advanced technology.
Despite the optimistic tone that Chinese state-media had adopted prior to the meeting, there remain lingering concerns regarding China’s struggling economy and the ongoing rivalry between the two nations. It is evident that areas of disagreement between the two countries continue to persist, despite the leaders’ efforts to stabilize relations by committing to direct communication during times of conflict.
Xi, on his first visit to the U.S. in six years, emphasized that decoupling between the two countries was not an option, stressing the importance of maintaining a positive relationship. The Chinese public generally holds a relatively positive view of the U.S., and this visit will likely be portrayed as an effort by Xi to bring the relationship back on track.
The meeting, which took place on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco, came as a welcome development following another key event that reduced geopolitical risk: Taiwan’s two main opposition parties jointly backing a presidential candidate for the January 13 election. This move increases the likelihood of an outcome that could improve Taipei-Beijing relations and remove the risk of a unilateral push for Taiwan’s sovereignty.
Overall, while the meeting between President Biden and Xi Jinping sought to address crucial issues, concerns remain regarding China’s economic struggles and the ongoing rivalry between the two countries. It is clear that steps need to be taken to further stabilize the relationship and find common ground on areas of disagreement.
Beijing’s Stimulus Key to Reviving Chinese Stocks
Investors like Papic are awaiting Beijing’s increased stimulus to revive the Chinese economy and garner their interest in Chinese stocks. However, recent data from October, including retail sales and private sector credit growth, indicates that growth remains anemic. Coupled with battered confidence and further contraction of fixed-asset investment, concerns persist.
Uncertainty continues to loom regarding the future of U.S.-China relations, particularly as previous promises have not always translated into actions. In response to a query about his trust in Xi during a press conference after the meeting on Wednesday, Biden emphasized the crucial need to “trust and verify.”
Biden stated, “We are in a competitive relationship with China, but my responsibility is to establish rationality and manageability to prevent conflict. That’s the essence of this situation.”
This competitive dynamic has prompted both countries to prioritize self-reliance and seek ways to counter one another, prompting global companies to reassess their exposure to China.
The U.S.-China Economic and Security Review Commission annually advises lawmakers to push for increased transparency regarding outbound investments into China. It also urges closer scrutiny of universities, companies, and investors in terms of their ties to China.
In addition, the commission underscores the significance of examining artificial intelligence, as China has embraced this technology as part of its military modernization.
Despite the seemingly softened tone following the Xi-Biden meeting, many anticipate that the Biden administration will continue its efforts to counter China. Several candidates vying for the Republican presidential campaign criticize Biden for not taking a tough stance.
While the meeting has alleviated some worst-case fears of a U.S.-China conflict, numerous risks persist. These risks include the ongoing rivalry between the two nations and concerns about China’s economic future. Consequently, investors may remain hesitant on the sidelines.