When Xi Jinping arrived in the US for the Apec summit, he found himself in a different position compared to his last visit. Five years ago, China was experiencing a buoyant economy and low unemployment rates. However, cracks started to appear in China’s “Chinese Dream,” and these cracks have only widened since then. The Chinese economy has turned sluggish, the property market is in a credit crisis, and a domestic debt bomb has expanded due to years of borrowing by local government and state-owned enterprises. Foreign investors and companies are now moving their money out of China, and youth unemployment is increasing. Additionally, Xi is facing issues within his power structure, with key members of his leadership team and military top brass mysteriously disappearing.
These economic challenges will have an impact on Xi’s negotiations with the US. China will want reassurance from Joe Biden that there will be no expansion of trade wars or tech rivalries, and that the US will not impose additional measures to decouple economically. Beijing has expressed complaints about US tariffs on Chinese imports, blacklisting of Chinese companies, and restrictions on China’s access to advanced chip-making technology. The meeting location in San Francisco, home to Silicon Valley, highlights the importance of technology in US-China relations. There is speculation about the announcement of a working group to discuss artificial intelligence, which China hopes to use to persuade the US to ease technology export restrictions.
Another significant issue is Taiwan. Chinese officials want the US to steer clear of supporting Taiwanese independence, while the US has emphasized its support for the self-governed island. Taiwan remains a sensitive point for both countries, and tensions could escalate. US officials are seeking military-to-military communication and Chinese cooperation in combating the fentanyl trade, and preliminary reports suggest that China will agree to these demands.
While Chinese state media has shifted its tone in favor of resetting relations and working on cooperation, mutual suspicion is expected to endure. The two leaders are unlikely to remove existing trade and economic roadblocks put up in the name of national security. The US has maintained many of the Trump-era sanctions on China, while China has enacted an anti-espionage law and conducted raids on foreign consulting firms.
Despite the desire for a stable and positive relationship with the US, Xi Jinping also needs to appear strong and resilient in the face of American pressures. The Chinese leadership must strike a difficult balance between seeking a stable relationship and maintaining their strength and resilience.
In summary, Xi Jinping’s shifting negotiating position and China’s economic challenges will impact the discussions between Xi and Biden. Economic stability, trade relations, technology, Taiwan, and national security will be key topics of discussion, but existing roadblocks and mutual suspicion may hinder major breakthroughs.
