In Beijing, Blinken Seeks to Stabilize Ties

Welcome to Foreign Policy’s China Brief.

The highlights this week: U.S. Secretary of State Antony Blinken heads to Beijing this weekend hoping to stabilize ties, Chinese authorities return their focus to the economy as the latest COVID-19 wave fades, and local governments face major budget woes.

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U.S. Secretary of State Antony Blinken lands in China this weekend for the first visit by a senior U.S. official since China’s reversal of its zero-COVID quarantine policies last December. That will make the logistics easier, but it’s awkward timing for a trip that aims to restore a damaged relationship. Officials in Washington are constantly finding new angles to push for U.S.-China decoupling, including several actions on that front in the last week alone: U.S. suppliers severed ties with Huawei and are getting closer to a potential major deal on semiconductor policy with Japan and the Netherlands.

Although the U.S. government as a whole seems increasingly comfortable with the idea of a long-term economic conflict with Beijing, Blinken and his deputy, Wendy Sherman, are keen to find stable footing in the relationship. That means both restoring the regular contact that once provided ballast for bilateral ties and which came to end amid the pandemic, as well as establishing working norms and limits to conflict.

Chief among these limits is avoiding actual war—something that will be discussed obliquely but is on both sides’ minds. Washington is full of talk—much of it without concrete evidence—that China will invade Taiwan by 2027 or 2025 or even this year. These predictions are generated largely by a military-security establishment that sees Beijing as an inevitable next opponent and a useful tool for its own budgetary ambitions.

Meanwhile, China goes through periods of overconfidence that it can take on the United States and is currently politically incapable of ceasing aggressive actions toward Taiwan. That makes it difficult to come to any public agreement to dampen talk of conflict over the island, but backdoor signaling may be possible, especially given the relative success of recent meetings such as the one between Chinese President Xi Jinping and U.S. President Joe Biden at the G-20 summit last November.

There are two other items likely competing at the top of Blinken’s agenda on the trip. The first is messaging behind closed doors that the anti-China bent of the new U.S. Congress does not match the Biden administration’s position. Some Chinese officials likely see the formation of a new congressional committee on competition with China as an official sanction for conflict. Per the head of the new committee, further actions that China would see as provocative could follow, including holding a “field hearing” in Taiwan itself.

Chinese leaders are generally skeptical about divided government and the separation of powers in the United States, viewing disclaimers from the White House about congressional actions as disingenuous. But the relative underreaction to then-House Speaker Nancy Pelosi’s trip to Taipei last year, including the quiet restoration of some of the U.S.-China working groups suspended after the visit, suggests there may be some attentive listeners in Beijing.

Blinken will also focus on Russia’s war in Ukraine and continued U.S. efforts to push Beijing away from its generally supportive attitude toward Moscow’s invasion. He may call out Chinese companies’ alleged role in supplying non-lethal aid to the war effort. But this line of argument is unlikely to work. Some analysts in China may be dissatisfied with Russia’s failings, but state media continues to churn out anti-NATO and pro-Moscow propaganda.

Although China remains unlikely to supply direct military aid, Chinese firms are more than happy to profit from the lack of competition in exports to Russia. Xi is likely headed to Russia for his first big trip of 2023, and it will probably be friendly rather than an opportunity for rebuke.

The Biden team seems to want decoupling without destabilization—a gradual snipping of economic ties. China’s messaging ahead of Blinken’s visit, though, has called on pro-engagement arguments—like that of former U.S. Treasury Secretary Hank Paulson—and seems to hope for a return to the days when the chance of profit made U.S. corporations and financiers Beijing’s best lobbyists. For U.S. hawks, China’s aversion to decoupling even as it continues to impose restrictions on foreign investment is evidence that the previous arrangement was tilted in Beijing’s favor.

Still, Chinese leadership has a vested interest in avoiding further destabilization, not just for geopolitical reasons but also for domestic ones. Economic and political instability in the last year have left Beijing on the back foot, and it is likely to be more risk-averse than before. That’s why officials have put a harness on more vocally aggressive diplomats, with so-called wolf warriors removed from prominent posts.

Economy trumps COVID fears. Chinese authorities continue to emphasize that the COVID-19 wave that began late last year peaked in late December, with cases now significantly down. That seems like a big bet given the unreliability of official statistics—and the implicit framing that this first wave will be the worst one. Attempts to approximate the real death toll have led foreign outlets to look at indicators such as mourning flowers. Later waves will likely be subject to even more concealment.

At this point, both the government and the public are more concerned with economic revival. Good news has followed the recent Spring Festival holiday, but reopenings are still fragile and supply chains have not fully recovered. Consumer spending and travel numbers showed a decent recovery, up from 2022 but still below the pre-pandemic heights of 2019.

Texas land ban. Texas is attempting to ban non-U.S. citizens from four countries—China, Iran, Russia, and North Korea—from purchasing land in the state, with Beijing as the law’s main target. U.S. right-wing media has taken up the cause, exaggerating the scale of the supposed problem. Chinese firms own just 192,000 acres of land in the United States, out of 35 million acres owned by foreigners. (For scale, 192,000 acres is 0.11 percent of all the land in Texas.)

The problem is that a suspicious amount of this Chinese-owned land is close to sensitive military sites. This is something that could be solved with careful regulation. But the Texas bills would simply ban Chinese green card and work visa holders from buying a house, and Chinese American groups have singled it out as a dangerous and racist law.

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Budget woes. The data from a very bad year for the Chinese economy is still coming out in bits and pieces. The latest news: The budget deficit rose to a record $1.3 trillion last year, which is larger than what was predicted even a few months ago. The crumbling of China’s property market is contributing to the funding gaps; it has disrupted local government funding, which is largely dependent on revenue from land sales to real estate developments.

That dependence has left holes in local government budgets, as did the spending demands of China’s zero-COVID policy, and it has worsened land grabs as authorities look to replace missing revenue. Civil servants have suffered pay delays as a result, especially in smaller towns. Even Chinese Communist Party officials have seen benefits slashed. Some Chinese cities have turned off public services like heating for part of the day as a result.

U.S. enforcement loopholes. U.S. government agencies are currently exhibiting enthusiasm for restricting the technology supply to China and blocking Chinese investments in the United States. But within the United States—a country with strong rule of law—it’s more difficult to impose these restrictions than it is in China. For example, Chinese surveillance firm SenseTime just successfully argued its way around 2021 restrictions, leading to a 35 percent jump in its stock price.

The constantly proposed (and mistaken) attempts to ban TikTok in the United States not only failed in court in 2020 but also would likely be blocked by the Berman amendments, which are Cold War-era laws allowing the free flow of ideas from the Soviet bloc. New laws are closing some of these loopholes, but the process can take years and runs into genuine concerns about freedom of speech and commerce.