The U.S.-China Relationship Has Entered a New Phase

Diplomacy post-Biden-Xi summit is a test of intentions.

By , a senior fellow with the Atlantic Council’s Scowcroft Center for Strategy and Security and its New American Engagement Initiative.
Biden sits at a desk next to a TV monitor showing Xi Jinping also seated at a desk.
Biden sits at a desk next to a TV monitor showing Xi Jinping also seated at a desk.
U.S. President Joe Biden meets with Chinese President Xi Jinping during a virtual summit from the White House in Washington on Nov. 15. Mandel Ngan/AFP via Getty Images

Two weeks after the virtual summit between Chinese President Xi Jinping and U.S. President Joe Biden, many have dismissed the meeting as just a photo opportunity. “Little More Than Polite Words,” read the New York Times headline. But in fact, it was a serious effort, months in the making, by both sides to try to halt the dangerous downward spiral toward conflict.

The summit attempted to put a floor on a conflict that threatens to spiral out of control and see if there was enough space for both sides to accept power limits and find room for compromise. It’s not clear whether that’s possible or whether U.S. and Chinese ambitions are fundamentally incompatible. But it’s a question that needs to be answered.

U.S. policy toward China is going through the five stages of grief. Washington was too long in the denial stage: Since former U.S. President Barack Obama’s period, it still thought China would reform and become more like the United States—or, at least, play by its rules. Then, with the onset of former U.S. President Donald Trump, Washington entered the anger phase: bipartisan demonization as well as outrage that China played the United States to facilitate its rise, with the United States then driven to counter it or somehow roll it back.

Two weeks after the virtual summit between Chinese President Xi Jinping and U.S. President Joe Biden, many have dismissed the meeting as just a photo opportunity. “Little More Than Polite Words,” read the New York Times headline. But in fact, it was a serious effort, months in the making, by both sides to try to halt the dangerous downward spiral toward conflict.

The summit attempted to put a floor on a conflict that threatens to spiral out of control and see if there was enough space for both sides to accept power limits and find room for compromise. It’s not clear whether that’s possible or whether U.S. and Chinese ambitions are fundamentally incompatible. But it’s a question that needs to be answered.

U.S. policy toward China is going through the five stages of grief. Washington was too long in the denial stage: Since former U.S. President Barack Obama’s period, it still thought China would reform and become more like the United States—or, at least, play by its rules. Then, with the onset of former U.S. President Donald Trump, Washington entered the anger phase: bipartisan demonization as well as outrage that China played the United States to facilitate its rise, with the United States then driven to counter it or somehow roll it back.

The Biden-Xi summit marked an effort to move to the third stage: bargaining. The current U.S. consensus is firm on what Washington objects to but not so on what it wants or needs. One got a sense that both leaders, fearing things were spinning out of control and facing difficult and time-consuming domestic problems, needed to put in place, as Biden phrased it, “commonsense guardrails,” so “competition between our countries does not veer into conflict, whether intended or unintended.” In short, they wanted a modicum of stability and predictability—to put a floor under the relationship.

But is that even possible? The summit opened with a reminder of the depth of nationalist passions as both leaders recited their respective grievances: for Biden, human rights, repression in Xinjiang and Hong Kong, aggressive actions in the South and East China Seas as well as toward Taiwan, and predatory trade practices; for Xi, U.S. pressure over what he views as China’s internal issues and U.S. military responses to Beijing’s assertiveness. The hope is necessity (for self-preservation) will be the mother of invention, allowing the two nuclear powers to find a modus vivendi.

Critics have accused Biden’s China policy (not entirely unfairly) of being “Trump lite”—tariffs, decoupling, virtue-signaling, and all the rest—just with a softer tone. But like Biden’s foreign policy writ large, his China policy has been a constant tug of war between values and interests, often tilting toward pragmatism, seen in summits with Xi and Russian President Vladimir Putin as well as the deals around the Nord Stream 2 pipeline.

The heated political climate around China has likely complicated Biden’s efforts to put his stamp on the issue. Biden’s own advisors seem to take a careful approach. Take the views articulated by Biden’s top advisors—Asia czar Kurt Campbell and National Security Advisor Jake Sullivan. In an important 2019 Foreign Affairs essay, they argued that analysts were right to discard earlier optimistic assumptions about China, but “in the rush to embrace competition, policymakers may be substituting a new variety of wishful thinking for the old … by assuming that competition can succeed in transforming China where engagement failed—this time forcing capitulation or even collapse.” Instead, they explained that “coexistence means accepting competition as a condition to be managed rather than a problem to be solved” and both the United States and China “will need to be prepared to live with the other as a major power.”

But stuff happens. The complexities—and existential risks—of the multidimensional relationship between two nuclear weapon states bumping against each other pull in different directions. In China, the United States is an easy target for officials looking to boost their own careers in an atmosphere of growing nationalism. In the United States, accusing opponents of being too soft on Beijing is a convenient political weapon. This mutual demonization inflames both respective nationalisms, complicating any U.S. and Chinese policy efforts to create a framework for managing competitive coexistence.

In the economic realm, for all the rancor and trade wars, U.S.-China interdependence has not exactly shriveled. Yes, there’s been some decoupling by both sides on sensitive tech trade, U.S. firms diversifying supply chains and near-shoring, and China delisting firms from U.S. exchanges as well as applying retaliatory tariffs. But, according to a U.S. Chamber of Commerce poll, while firms are scaling back China operations, 71 percent of firms have no plans to leave.

According to the Office of the U.S. Trade Representative, China remains the United States’ largest trade partner, with $615 billion in bilateral traded goods and services in 2020; U.S. investment was also up, to the tune of $124.5 billion. Moreover, after China opened its financial markets to majority foreign ownership in 2020, Wall Street firms have poured $212 billion into Chinese bond markets.

Yet China’s predatory industrial policies, cyberhacking, economic coercion, and efforts to bend international institutions to its preferences have all exacerbated geoeconomic competition. This parallels Beijing’s revisionism and aggressive military activities in the East and South China Seas as well as its intimidation of Taiwan with hundreds of sorties of fighter planes and bombers. More recently, China threatened Indonesia to stop exploring for oil and gas in its own maritime territory based on Beijing’s false territorial claims there. China’s so-called nine-dash line claims most of the South China Sea, though a 2016 international tribunal in the Hague ruled that its claims violate the United Nations Convention on the Law of the Sea, which Beijing ratified but selectively adheres to.

Yet none of this has served Beijing very well. The much-vaunted Belt and Road Initiative has been something of a flop. China’s assertive behavior has not only brought tensions with the United States to a boil, but it has hurt its own goal, serving to mobilize much of Europe and Asia into coalitions to counter it. Burgeoning negative views of China are detailed in recent polls.

At the same time, Xi is facing unprecedented economic turbulence at home. A property sector that accounts for some 29 percent (or perhaps slightly less) of China’s economy remains the foundation of a fragile financial system, with $300 billion in total private and government debt. The concern is debt, declining growth and productivity, energy shortages, and demographic decline reflect an outdated economic model. China may be in a middle-income trap as the Chinese Communist Party fears needed economic reforms would be politically destabilizing.

At the same time, some of China’s most productive sectors, such as technology, are seeing a concerted political assault due to fears of ideological corruption or of straying outside of party control. Some have argued that it reflects a China whose power is peaking—to be followed by a slope of decline.

Combined with fears of looming conflict, this predicament may help explain Xi’s interest in the recent summit, perhaps creating possibilities for altering some of Beijing’s policies. The United States—and the rest of the world—may have more leverage over Beijing’s behavior than they realize, despite the heated rhetoric emerging from Chinese media and diplomats.

Post-Biden-Xi summit diplomacy is a test of intentions. The only way to answer fundamental relationship questions is to put aside assumptions and pursue negotiations that will test intentions on the issues that created friction. This will necessarily be an incremental and protracted process.

So far, efforts to dial down confrontation have been modest but not insignificant. A deal to ease restrictions on journalists in both countries seems designed to set a new tone—although there’s little sign China will actually open up coverage or cease targeting foreign journalists. But if it does follow through, reopening closed consulates in Chengdu, China, and Houston as well as easing mutual visa restrictions should follow.

More concretely, the surprise U.N. climate change conference deal appears to be a product of preparatory diplomacy. Reducing methane, phasing down coal, and cooperating on clean energy technology are key areas of collaboration. Similarly, the two largest oil consumers, both faced with high energy prices, agreed on energy security measures, such as joint releases from their respective strategic petroleum reserves, and increased Chinese purchases of U.S. natural gas, building on Trump’s phase one trade deal.

Geoeconomics is a core area of competition. On trade more broadly, it will require more U.S. pressure to alter Beijing’s protectionist trade policies. The United States, European Union, and Japan are discussing industrial subsidies, and if a common position is reached, that could aid World Trade Organization reform and put pressure on China to curb and be transparent on its massive subsidies. Regarding tech competition, the United States needs to step up its game on regulation and manufacturing—major legislation to fund $52 billion of U.S. chip production has lingered for a year. Another test will be negotiating tech standards.

Finally, on the existential question of strategic stability, the asymmetry of some 3,750 U.S. nuclear weapons to China’s roughly 350 weapons have long precluded arms reduction deals. But on more urgent issues of new risk reduction measures, the upcoming, top-level military-to-military talks will be a test of Beijing’s seriousness. With U.S. and Chinese maritime and air forces operating in dangerous proximity to each other, there is pressing need for new arrangements so operators can better communicate to prevent incidental clashes that could escalate. Both sides could take reciprocal steps to reduce the games of chicken being played in the East and South China Seas as well as in waters and airspace around Taiwan.

Still more imperative is a need to begin addressing nuclear risks posed by technologies, such as offensive cyber and anti-space weapons that could take out nuclear command centers and control or blind satellites. These issues and the hypersonic missile arms race are new mutual vulnerabilities that may threaten crisis stability. It will not be easy or quick to mitigate these risks, but China’s possible willingness to begin serious talks in these areas as well as the rest of the Biden-Xi summit menu are the metrics to determine if a framework for managing a competitive coexistence is possible.

Robert A. Manning is a senior fellow with the Atlantic Council’s Scowcroft Center for Strategy and Security and its New American Engagement Initiative. Twitter: @Rmanning4

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