Pearls and Irritations

There are 21 countries attending APEC and over 1,200 organisations from within those countries. Only one of the 21 countries, which happens to be the host, has a recent history of promoting de-coupling, or de-risking which is diametrically opposed to what APEC stands for; they seem to forget that the C means cooperation.

For the first time in his 11 years as President of China, Xi Jinping has done something that most Chinese people didn’t want him to do. It won’t cause a serious problem; he’s too popular to have this damage the respect and admiration that most Chinese people hold for him, but it was a surprise that he agreed to meet with Joe Biden in San Francisco.

In the midst of a trade war, a tech war and the increasing threat of a real war in the Middle East that will affect China enormously, an increase in tensions created by senior visits, increased arms sales and elevated rhetoric over Taiwan, along with talk of de-risking, decoupling and even “independence from China”, it certainly seems like a strange thing for China to openly embrace the person responsible for all this negativity.

China’s media however, is upbeat, there is a lot of positivity and hope that this meeting will set the diplomatic path for the future, but of course, it’s an election year and every candidate hoping to defeat Joe Biden next November, has declared their own special war on China.

San Francisco also had a surprise and for days several complaints have rung out that because Xi is coming to town, the city has cleaned-up; it polished the floors of the BART (the Bay Area Transit System) and removed homeless people.

The facts that APEC is coming to town and, according to the slogans, it’s “going to be epic”, the leaders of 21 nations and even their own President were also coming to town might have had more to do with any clean-up than the leader of an adversarial country deciding to visit. Every city, everywhere cleans up its act when international leaders descend upon it but Californians, and their media, for some reason, assume it only happened because China’s president agreed to come.

China is the USA’s largest trading partner, although there is debate about that because Mexico recently topped the poll and became No. 1, but at the same time, Mexico increased imports and direct investment from China, indicating that the deals are not over, they are just being managed by middlemen below the southern border.

Apart from trade, as far as China is concerned, there is only one important item on the agenda – Taiwan; but for the USA, there are many. Fentanyl, is a huge problem for the USA and many of the precursor chemicals come from China. China has restricted exports, controlled production and cooperated with the Drug Enforcement Agency in every respect but criminal gangs are still getting Fentanyl into the USA. Talk of climate change is big in the USA but as Gavin Newsom recently discovered, action on climate change is bigger in China. Human rights are a big talking point too but the USA knows, China is not the one in the room committing them.

Biden and Xi last met on the sidelines of the G20 summit in Bali and it looked positive, but since then, it’s been anything but. After the G20 meeting there was much hope that the future could be brighter but, a few months later, Blinken cancelled a trip over an errant weather balloon which has been confirmed to have been exactly what China said it was, a balloon blown off course.

Once that hurdle was overcome, there was a scurry of diplomatic visits, Blinken, Yellen, Raimondo and even former Presidential candidate John Kerry visited China but, despite those visits, further sanctions were “clarified and strengthened” upon China just a week ago.

Consequently, despite the fact that Chinese media is hyping this up as a “window of opportunity”, many Chinese people believe that it won’t make any difference. Even when Xi visits, meets with and has cordial discussions with Biden. The school of thought in China is that Biden might not be there in 12 months or, if he is, he either won’t be in a position to make decisions or he won’t abide by them.

Jake Sullivan has said that the two leaders will strengthen relations, disregarding the fact that China has already been open while the USA has imposed sanction upon sanction on China.

Gina Raimondo has stressed there is great competition between the two countries, which is fine but competition means a level playing field that the USA will not afford China.

Janet Yellen has met her counterpart, Vice Premier He Lifeng several times this year and despite positive glows coming from all her meetings, 1,300 Chinese companies remain sanctioned, tariffs remain on many different products and all potential candidates in the election race talk of more.

One thing is certain, there are 21 countries attending APEC and over 1,200 organisations from within those countries. Only one of the 21 countries, which happens to be the host, has a recent history of promoting de-coupling, or de-risking which is diametrically opposed to what APEC stands for; they seem to forget that the C means cooperation.

Chinese people know this, Chinese businesses know this and the Chinese government knows this. So, China has extended trade routes into Eurasia through the Eurasian Economic Union, it’s extended trade with Iran, the Middle East and South America and Africa through growth in BRICS, it’s grown its trade regionally with 14 countries through the recent signing of RCEP and, of course, the recent BRI summit in Beijing proved to the world that China is not sitting on its laurels when more than 10,000 delegates from 150 countries attended the Forum in October this year.

The difference between the two largest economies in the world couldn’t be more stark. China, through its trade relations seeks cooperation and development wherever it goes, the USA, by its own admission, seeks to “benefit US workers, businesses and families”. This would be a very difficult, in fact impossible, task without China as a trading partner

There can be no doubt that China knows US de-coupling, de-risking or even declaring independence will hurt and for this reason, Xi’s visit to San Francisco is important. But it will hurt the USA a lot more and Biden must already know that his actions after the meeting will need to demonstrate a US commitment to improved relations.

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