A hint of thaw in the new cold war

The leaders of the world’s two superpowers had earlier wrapped up four hours of talks in San Francisco when the US president pulled out his phone and showed his Chinese counterpart a photo.

“Do you know this young man?” Joe Biden asked, according to Chinese state media. “Yes,” replied Xi Jinping, smiling. “That was me 38 years ago.”

The image showed a young Xi standing next to the Golden Gate Bridge on his first-ever visit to the US in 1985, when he was a little-known provincial leader. “You haven’t changed a bit!” said Biden.

In fact, the moment of levity was a striking reminder of all that had changed — not only in the past four decades, but especially in recent years as US-China relations hit new lows and some worried that the two countries were on a collision course over Taiwan. The shooting down of a suspected Chinese spy balloon just off the US east coast earlier this year seemed to end any hope of a diplomatic thaw.

President Xi Jinping in 1985 in front of San Francisco’s Golden Gate Bridge © Xinhua News Agency/eyevine

Yet nine months on from the balloon incident, Xi and Biden’s second meeting as leaders ended with auspicious signs of progress. Asked by a reporter how the summit at the historic estate of Filoli had gone, Biden smiled, gave a double thumbs up, and shot back “Well!”

At a press conference held after Xi had departed for San Francisco to attend the Asia-Pacific Economic Cooperation forum, Biden said they had held some of their “most constructive and productive discussions”.

The leaders emerged with two concrete pledges. Biden said China had agreed to reopen communication channels between the US and Chinese militaries, which it shut in 2022 after then US House Speaker Nancy Pelosi courted outrage in Beijing by visiting Taipei.

Washington and Beijing also agreed to create a counter-narcotics working group, which would involve China cracking down on Chinese groups that supply Mexican cartels with ingredients for fentanyl, a synthetic opioid responsible for 70,000 overdose deaths in the US last year.

“It’s important for the world to see that we are implementing the approach in the best traditions of American diplomacy. We’re talking to our competitors,” Biden told reporters in an ornate hall. “President Xi . . . and I agreed that either one of us could pick up the phone, call directly, and we’d be heard immediately.”

Xi was equally conciliatory in tone. “Planet Earth is big enough for the two countries to succeed, and one country’s success is an opportunity for the other,” he said.

But in various situations on Wednesday, both leaders made crystal clear that stark differences remained. Xi warned the US not to interfere in China’s domestic issues — a clear reference to Taiwan, over which Beijing claims sovereignty — and criticised US export controls on cutting-edge technologies. Biden voiced concern about what the US views as China’s unfair economic practices and “coercive” military activity across the South China Sea.

One summit was never likely to resolve the fundamental issues driving the rivalry between the US and China. Beijing resents the way the global order has been created in America’s image, while Washington fears the rise of a potential peer competitor which is bent on squeezing the US military out of the western Pacific.

But it presented an opening to easier relations going forward, experts say, which will reassure Washington’s allies in the region who are looking anxiously ahead to a year that starts with a presidential election in Taiwan and ends with one in the US.

“This creates a more permissive environment for the two sides to work together on a list of global issues,” says Amanda Hsiao, a China expert at the International Crisis Group, “and makes it less likely that the US and China will accidentally stumble into a kinetic [military] conflict.”

‘Managed competition’

When Xi and Biden first met as leaders, a year ago in Bali, they agreed to set a “floor” under the US-China relationship to prevent it from sinking further. But the shooting down of the balloon soon fractured that.

This week’s summit stabilised things, US officials say. The talks “introduced a dose of reality” into US-China relations, according to one senior US official, who felt that Beijing was starting to understand the US paradigm of having “managed competition” between the rivals.

The outcomes from the meeting should not be mistaken for a rapprochement, officials cautioned, but the US came out feeling that it had achieved its goals. “Usually, in negotiations with the Chinese, you don’t end up with anything near what you wanted,” the official adds. “In this one, we ended up with two really solid deliverables.”

The rosy account that China’s state media gave of the meeting reflected the country’s eagerness for detente. The People’s Daily stressed the personal connection between the leaders, including Biden waving Xi off in his customised Hongqi sedan — which the car-loving president appeared to inspect with admiration — when the Chinese leader left. 

Biden was not Xi’s only desired audience in the US. In a downtown hotel after the meeting, the Chinese president launched a charm offensive with US business leaders, including Apple chief executive Tim Cook and BlackRock chief Larry Fink, at a $2,000-a-plate dinner of black Angus steak and broccolini.

Presidents Biden and Xi during a conference at the Filoli estate in northern California. The US leader said these talks were some of their ‘most constructive and productive’ © Rao Aimin/Xinhua News Agency/eyevine

In a speech, Xi said he and Biden had reached an “important consensus” in a seeming attempt to reignite foreign investor interest in the stagnant Chinese economy, which is struggling with a sagging property market and a crisis of confidence in the private sector. “The world needs the US and China to work together,” he said.

Kevin Rudd, the former Australian prime minister who is also a former ambassador to China, says Beijing’s desire for stabilisation is partly driven by its economic difficulties, and represents an effort “to allay international and domestic investor concerns about geopolitical risk”.

China is also attempting to take advantage of a split within the Biden administration, says Matt Turpin, a US-China expert at the Hoover Institution. Treasury secretary Janet Yellen favours a sounder economic relationship, he says, while national security adviser Jake Sullivan and his camp are focused on trying to shape the international environment around China in ways that would put pressure on the regime. “Beijing prefers the Yellen approach,” Turpin says.

Each country has different reasons to want a good outcome, says Wang Yiwei, a foreign relations expert at Renmin University in Beijing. The US knows its allies are anxious about its pressure to limit economic ties with China, he says, while Beijing wants to lower tension before the US enters election mode next year. “There might be more turbulence, so stabilising China-US relations now is the hope for China [so that it can] focus on the economy,” says Yiwei.

Yet critics question whether the meeting had achieved anything that would actually solve the fundamental problems in the relationship — particularly given how they remain at such odds over Taiwan.

“We’re exactly where we were one year ago in Bali,” says Turpin. “Agreeing to have dialogue is nice, but does it lead us anywhere out of the hostile rivalry?”

The Taiwan question

The Taiwan discussion was the toughest part of the summit, say several people familiar with the talks. But the senior official says it was less intense than in the Bali meeting, which came on the heels of Pelosi visiting Taiwan.

“Xi didn’t pull any punches on Taiwan, but the temperature was not as elevated. It was a shorter intervention than in Bali,” the official says. “The conversation has matured a little bit.”

At his press conference, Biden evaded a question on whether he stood behind earlier pledges to defend Taiwan from a Chinese attack. In words that were welcomed in Beijing, he said only that the US was committed to the “one China” policy, under which it recognises Beijing as the sole government of China while only acknowledging its claim of sovereignty over Taiwan.

US officials have stressed that the president wanted to be very careful in public ahead of Taiwan’s election in January.

But a broader anti-China mood in Washington will remain an obstacle to better relations, warns Ryan Hass, a former White House National Security Council director for China and Taiwan.

“Xi seemed to be extending an outstretched hand to the American business community and public,” says Hass, now a China expert at the Brookings Institution, who attended the dinner with business leaders. “It was a notable gesture but likely not one that will be reciprocated by American leaders in the current political environment.”

Underscoring that tough climate, Biden himself said that Xi was a dictator “in a sense” when asked at the press conference if he stood by his earlier use of that term in June.

This easing of tensions is unlikely to change much in the short term, says Zou Zhibo, a senior official at the Chinese state-affiliated CASS think-tank. “I’m worried about the American side,” he says. “Next year they have an election campaign [and] they can make use of Taiwan.” It could take another one or two years to get relations back on track, he adds.

A Chinese fighter jet seen from a US Air Force B-52. The US military said the Chinese jet approached unsafely and with excessive speed during a routine US military exercise in the South China Sea last month © US Indo-Pacific Command/Cover Images/Reuters

But the summit also showed that the two leaders can at least get along. Jennifer Welch — a former US National Security Council official for China and Taiwan, and now chief geoeconomics analyst at Bloomberg — says she was surprised how the usually unsentimental Xi appreciated some US gestures, including the photo. “It was positive that these two leaders can maintain a working rapport even with structural tensions,” she says.

The litmus test now, Welch adds, is whether China sticks by its summit promises. Critics often point to Xi’s visit to Washington in 2015 when he stood beside then President Barack Obama and pledged that China would not militarise islands and reefs in the South China Sea — a promise that was soon broken.

Rudd, who is now the Australian ambassador to the US, says one barometer of whether the summit had stabilised ties would be if China followed through on its pledge to stem the flow of fentanyl ingredients. Another, he adds, would be if China flew fewer warplanes over the median line in the Taiwan Strait, which acted as an informal buffer before Pelosi went to Taiwan.

“The bottom line with all of the above is the proof of the pudding will lie in the eating,” Rudd says.

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