Xi Picks Opportune Time to Cool Tensions With Biden Meeting

(Bloomberg) -- China’s Xi Jinping has plenty of pressing reasons to arrange a meeting with U.S. President Joe Biden and dial back tensions between the world’s two largest economies.

The announcement Thursday of a virtual summit before the year’s end between Xi and Biden comes as China grapples with a series of domestic challenges and looming political milestones. Beijing is navigating fears over the potential collapse of indebted real estate firm China Evergrande Group, preparing to host a pandemic Olympics, battling an energy shortage and coping with signs of cautious consumers. 

With the ruling Communist Party gearing up for a twice-a-decade party congress next year -- when Xi is expected to seize a landmark third term -- it makes sense for China to stop tensions with the U.S. spiraling. The challenge will be doing so without appearing to retreat from an assertive foreign policy posture that’s satisfied nationalist sentiment at home.

“There are definitely domestic considerations,” said Hoo Tiang Boon, coordinator of the China program at Nanyang Technological University’s S. Rajaratnam School of International Studies in Singapore. “It’s reassuring to the whole world that both sides are talking at the highest level. But domestically -- although Xi doesn’t want to to appear weak -- it wouldn’t help him if relations with the U.S. go off course.” 

While the summit announcement follows efforts by Biden to moderate some Trump-era policies toward China, the shift also comes at a good moment for Xi. The Chinese leader has spent much of his first nine years in power building his stature as a global player, a role that requires things like sharing stages with U.S. presidents and hosting big events such as the Beijing Winter Olympics in February. 

All that has been made harder for Xi by the coronavirus first discovered in the central Chinese city of Wuhan almost two years ago. Xi hasn’t left his country since the early days of the pandemic in January 2020 -- the longest such stint of any Group of 20 leader -- and was expected to miss the bloc’s summit this month in Rome. That deprived him of a chance for a less formal meeting with Biden. 

Thus, Xi appears willing to settle for less than the two lists of demands Chinese diplomats presented visiting American envoys with in July. Instead, the breakthrough came after the U.S. released Huawei Technologies Co. Chief Financial Officer Meng Wanzhou from extradition proceedings in Canada. China immediately freed two detained Canadians Michael Kovrig and Michael Spavor, although both sides denied any link between the decisions.

By the time U.S. National Security Adviser Jake Sullivan met top Chinese diplomat Yang Jiechi on Wednesday in Zurich, Beijing was ready to embrace a more optimistic tone. “The talk was constructive and conducive to improving mutual understanding,” China’s Foreign Ministry said in a statement after the meeting.

Some urged caution on viewing the summit as a major shift. Xi likely agreed to the proposed upcoming meeting because he appears to be in a position of strength, said Bonnie Glaser, director of the Asia program at the German Marshall Fund of the United States. 

“From Xi’s perspective, the U.S. has responded to some of his demands so it appears that the U.S. needs China more than China needs the U.S.,” said Glaser, who has advised the U.S. government. “Further deterioration in U.S.-China relations doesn’t serve Xi’s interests, but I don’t see that the Chinese have made any concessions.”

The meeting came after a record number of Chinese warplanes made incursions into the airspace in Taiwan and the U.S. and some of its closest allies held naval drills in waters nearby the democratically ruled island. Such saber-rattling may continue, given domestic pressure on both leaders to look strong. 

Xi needs to balance his geopolitical ties with the expectations of a domestic audience who believe the island is China’s sovereign territory. Biden faces a similar balancing act, as Hu Xijin, editor-in-chief of the Communist Party’s Global Times newspaper, said in a tweet on Thursday.

“Given the clamorous anti-China public opinion in the US, space for adjusting China policy is limited,” Hu wrote.

There’s even a risk that the summit could be canceled. A virtual meeting is easier to call off than an in-person one, argued Hoo, of Nanyang Technological University. 

Both sides recognized that conversations at lower levels weren’t working and that direct communication between heads of state was needed to prevent a miscalculation, Angela Mancini, a Singapore-based partner and head of Asia Pacific markets at consultancy Control Risks, told Bloomberg Television on Thursday. 

In Washington, there’s broad acknowledgment that former President Donald Trump’s trade war with China hasn’t worked out well for American businesses, Mancini added, noting that U.S. Trade Representative Katherine Tai recently mentioned “re-coupling.” 

Further illustrating U.S. concerns about the need to maintain communication on economic issues, Secretary of State Antony Blinken told Bloomberg Television on Wednesday that Washington wanted China to act “responsibly” with regard to Evergrande’s debt crisis. “What China does economically is going to have profound ramifications, profound effects, on literally the entire world because all of our economies are so intertwined,” Blinken said. 

After years of sparring on everything from tech to trade and the origins of the coronavirus, Beijing and Washington were trying to find a middle ground that still plays to their domestic constituencies, Mancini said. 

“The U.S. is in a very tough position,” she added. “Both sides are.”  

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