Global Eyes

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Photo: US State Department

ASIA

APEC SUMMIT: Leaders and representatives from the 21 economies that make up the Asia-Pacific Economic Cooperation forum are meeting in San Francisco this week. Biden and Xi are met for the first time since a meeting on the sidelines of the G-20 Summit in Indonesia in November 2022. Biden said “real progress” had been made during his conversation with Xi at a swanky estate near San Francisco.

Biden says his goal for Xi meeting is getting communication with China back to normal:

Biden … said his broad goal was to get Washington and Beijing “on a normal course corresponding” once again even as they have sharp differences on no shortage of issues. “Being able to pick up the phone and talk to one another if there’s a crisis. Being able to make sure our militaries still have contact with one another,” Biden told reporters at the White House. “We’re not trying to decouple from China, but what we’re trying to do is change the relationship for the better.”

Zeihan thinks the goal of this meeting is for Biden to assess whether Xi still has his faculties about him. (I’m sure Xi is wondering the same thing about Biden):

Last chance saloon for US-China relations: This week’s pivotal meeting between Presidents Biden and Xi may represent a final throw of the dice to salvage the global economic system:

The United States and its allies came together in 1944 to establish the fundamental wiring and plumbing of the global economic system that has largely remained in place ever since.  This Bretton Woods system of economic rules led to the US dollar becoming the global reserve currency and inspired the foundation of powerful new institutions like the International Monetary Fund and World Bank headquartered in Washington DC. Both institutions and the wider regulation of the international monetary system have historically been dominated by the United States, helping it to maintain its longstanding position as the undisputed economic heavyweight of the world. 

Despite low expectations for the meeting, the November 15 face-to-face talks between Presidents Biden and Xi on the sidelines of the Asia Pacific Economic Conference could nonetheless set in motion an unstoppable chain of events to unravel all of this. If the world’s two great powers cannot reach an accommodation following five months of preparatory talks, there is a real risk of both countries permanently diverging, resulting in profound and negative consequences.  

Update: Biden and Chinese Xi have agreed to resume military-to-military communications and work to curb fentanyl production. “We’re back to direct, open clear direct communication on a direct basis,” Biden said, adding miscalculations can cause real trouble with any major country.

Update: Xi told Biden that Taiwan was the biggest, most dangerous issue in US-China ties. A senior US official quoted Xi as saying China’s preference was for peaceful reunification with the Chinese-claimed island of Taiwan, but apparently he went on to talk about conditions in which force could be used. Xi was trying to indicate that China is not preparing for a massive invasion of Taiwan, the official said, but he indicated that this won’t change the US approach.

Chinese state media changed its tone in the lead-up to the Biden-Xi meeting:

The usual anti-US rhetoric was put on pause as outlets pushed propaganda messages about engagement and cooperation. But Chinese social media has been less forgetful about the past five years of hawkish and bitter US coverage from state media. Many have mocked the sudden shift in attitude. … “Are we no longer anti-America now?” another commentor posted with a smirking face. Some are still warning against the “potential US infiltration”. “Americans are good at letting your guards down and stabbing you while you are at sleep. We for sure won’t let them fool us,” a person said on Weibo.

The State Department announced, ahead of the meeting, that China and the US have agreed to “pursue efforts to triple renewable energy capacity globally by 2030.” The deal is the product of months of negotiations John Kerry and his counterpart Xie Zhenhua.

US and China agree to displace fossil fuels by ramping up renewables:

… [N]either the United States nor China will act rapidly unless the other does. Both nations are taking steps to tackle emissions, but hard-liners in each country argue the other is not doing enough, and each country has cast the other’s climate promises as insincere. While the United States has reduced its emissions, Chinese officials have said the American goal of cutting its pollution at least 50 percent from 2005 levels by the end of this decade is inadequate.

Leaders in China also are acutely aware of the partisan divide in the America on climate change and have little confidence that a future administration would keep promises made by Mr. Biden. … US lawmakers, on the other hand, note that China’s emissions continue to grow and that the country has so far only promised to hit a peak sometime before 2030 and then maintain a plateau before dropping. That’s unacceptable for most members of Congress, who believe that China, the world’s second largest economy, should be moving at a pace similar to that of the United States.

Moody’s casts a pall over Biden-Xi tête-à-tete. A US credit rating downgrade would underscore just how much US needs China—and who’s really the boss between Biden and Xi:

The 800-pound gorilla in the room when Joe Biden goes toe-to-toe with Xi Jinping on November 15 will be the extreme political dysfunction in Washington that is threatening America’s last AAA credit rating. As US President Biden angles to remind Chinese leader Xi who’s boss in San Francisco, partisan brinkmanship 3,000 miles away in Washington is reminding global markets that the world’s biggest economy is in a rather bad place. The threat Biden faces is less from Asia’s top trading power than lawmakers on Capitol Hill in burn-it-all-down mode.

Moody’s Investors Service just reminded Biden’s White House that the stakes are rising, and fast. On November 10, the last credit rating company to grade Washington AAA warned a downgrade is coming, and perhaps soon. Moody’s cited the US debt topping US$33 trillion and political polarization throwing fiscal management into chaos. … For all the challenges Xi faces in Beijing—slowing growth, property sector defaults, deflation, aging demographics—Biden faces his own daunting odds in stopping Moody’s from dealing his administration a humiliating blow.