On the China-U.S. Leadership Summit on November 16
November 26, 2021
The virtual summit between President Xi Jinping and President Joe Biden on November 16, 2021, has gathered great attention from the world as the current world politics is arguably being dominated by the great power relations between China and the United States. How did the summit turn out? What does it mean for U.S.-China relations and their future cooperation? What are the implications for third-party countries? In this dialogue, Ding Yifan, Senior Fellow of Taihe Institute, and Einar Tangen, Independent Political and Economic Affairs Commentator, join us to discuss this major leadership summit between the two world leaders.
Q: In what ways does this summit symbolize a diplomatic reset, both symbolically and substantially?
Ding Yifan: If you look at Western news reports, especially in Europe, they called this virtual dialogue a surprise. It means that the Western press tends to assume that bilateral relations between China and the U.S. were somehow going into a dangerous state. But all of a sudden, the US President and his cabinet members and their Chinese counterparts decided to get together for a virtual meeting where they talked peacefully and calmly about the bilateral concerns, the U.S.-China bilateral relations, and their assessments of global affairs. That is something very important as it sends a message to the world that our bilateral relationship is on its way back to its normal track. This is the symbolic significance of this virtual dialogue.
Einar Tangen: I’m going to speak from a different view, in terms of looking at the words and actions of the United States.
I think it was very important to have this summit when things were drifting into a potentially dangerous sphere. Unfortunately, I still think they are. Today, Taiwan announced that the first part of their 200 F-16 Vs, which will carry very advanced sidewinder missiles, capable of taking down other aircraft, is being put into place.
There are also the ongoing meetings between high-level administration officials and congressional delegations with Taiwanese officials and politicians.
So, just after a summit, when there's supposed to be a reset, when there’re supposed to be guardrails, when there is supposed to be a de-escalation, and President Xi referred to him as an "old friend," the next day, Biden’s administration starts walking it back, mostly in response to domestic political concerns. He seems to believe that there's so much animus towards China that he has to play an anti-China card every time he approaches some sort of rapprochement. As Professor Ding said, the danger is that it sends mixed messages and erodes trust.
I think Beijing is probably mature enough to see through some of this, but, at some point, it becomes very difficult to know exactly what Biden’s goals are. The speculation is that Biden was anxious to have this summit because of US domestic concerns about inflation. He is now faced with the need to roll back the Trump tariffs, which he failed to roll back, when he became president.
Most people were surprised he didn’t roll them back immediately, as he had indicated his opposition to them in his campaign. Now, Corporate America is calling for these to be taken down. It is estimated that it would create about 145,000 new US jobs, good-paying jobs. Plus, it would deal with the number one issue right now for Americans, which is inflation. It is one of the few options the administration has, but he has yet to come out and taken a leadership position on it, despite the advice of his staff and letters from 8 most prominent business associations.
So, I was expecting more positive kinds of reverberations to come after these meetings. But, so far, we just haven't seen many.
This lack of institutional clarity is not isolated. At COP26, Biden was critical of Xi and Putin for not being there in person, carping about it in his speech to the Assembly – a rather strange thing to be doing just prior to announcing a major China-U.S. climate change agreement, as the result of 30 meetings by John Kerry and his team. At minimum there seems to be a lot of strange, incongruent factors and currents within the administration which make it seem uncoordinated. They seem to be constantly zigzagging from one direction to another, without any clear strategic direction.
Q: Tensions in the Taiwan Strait seem to be a very salient concern in U.S.-China relations over the past few months since Biden assumed presidency. But during the summit, Biden said that the U.S. adheres to the strategic ambivalent stands in Washington's Taiwan policy. Do you think that means that the U.S. will not come to Taiwan’s defense if there was a military confrontation happening across the Strait, or is he just paying lip service?
Einar Tangen: The problem is clarity. In a press conference, Biden said the U.S. would come to the aid of Taiwan if it was attacked. An hour later, the state department was walking that statement back, stressing that adhering to strategic ambivalence is the US position.
Once again, during the virtual conference with Xi, he stated that the U.S. adheres to the One-China Policy, that an independent Taiwan is not on the table. But just afterwards, the U.S.-China Economic and Security Review Commission, which is a bipartisan commission under the Congress, announced that swifter actions to protect Taiwan have to be taken, including furnishing Taiwan with ballistic and cruise missiles, which are weapons prohibited under any reading of the Taiwan Relations Act.
As I have said, the U.S. seems to be constant zigzagging between positions which prevent any strategic or policy clarity. For example: after telling the assembled nations at COP26 that there has to be more action and fewer words, the United States held one of the largest sales of oil leasing rights in the Gulf of Mexico, 8 million acres, roughly 2 times the entire state of Florida.
Granted it’s not something the Administration wanted to do, but the fact that Republicans were able to force the sale and could take back the House and Senate in the midterms, underlines the reality that the U.S. does not have one leader at the moment. It is very much divided, and it's not clear what the future will be.
Ding Yifan: If you listen to President Biden’s statement, there is nothing new about the American official position with regard to Taiwan, or the so-called One-China Policy. There are not many new aspects in his statement. But I’d like to pick up on what Einar Tangen talked about just now: the real behavior of the United States with regards to Taiwan.
What the U.S. is doing may lead to some dangerous scenarios that all parties at stake would want to avoid because if the United States decides to sell those kinds of offensive weapons to Taiwan, and if Taiwan uses these weapons to, for example, initiate an attack on PLA's military aircraft or naval forces, the mainland will then respond to Taiwan’s provocation by launching an offensive attack back. And that is the default nature of military actions over the Taiwan Strait area. In this case, I suggest that the U.S. take precaution with regard to its arms sale to Taiwan. You have to exert some pressure over those Taiwanese separatist movements; you have to keep them calm. It is in the US interest to not let the Taiwan Strait get into a war. Re-unification is China’s national interest. This means that China would mobilize all these military forces if there was a confrontation as our national goal is at stake. This, for the United States, is a very dangerous "adventure" because if the US army fails to effectively defend Taiwan, it will completely lose its credibility to its allies and partners. So, the U.S. cannot afford to lose the defense of Taiwan. Moreover, the US army has little chance to successfully defend Taiwan because China has all those necessary weaponry at its disposal if there was a cross-Strait military emergency. China has enough land and air missiles to deter any aircraft carriers in the area. Besides, geographically, China is much closer to Taiwan than the U.S. You have all these Chinese aircraft ready for any counterattack. So it will be very difficult for the US army to impose unwanted scenarios involving Taiwan, in which case, it would be in US interests for the American army to exert pressure over these Taiwan separatists and prevent them from initiating a military adventure with the mainland of China.
Q: The next point I hope to pick up is trade, because trade was obviously one main area of discussion between the two leaders. The US side said that it is possible to modify its tariffs. Is this something that has to do with Washington adjusting its China policy in general? Or is it just coming from the inflation that is plaguing the US economy?
Ding Yifan: In this regard, I fully support Tangen’s analysis about quoting Joe Biden’s tentative plan to initiate this virtual talk, because the talk was first proposed by the Biden administration. So, we can accept that the U.S. or the Biden administration is in urgent need to get some Chinese approval for bringing our trade war to a stop. And then, because even Biden was poised to come into office, he knew that the trade war and the tariffs were harmful to the US economy, especially to the US economic recovery.
And nowadays, you see rampant inflation in the US economy. The tariffs can play a very important role in pushing up prices, because if you look at American families’ daily lives, "made in China" commodities are arguably everywhere. If they can reduce the tariffs, this can bring down the price to the previous level that could alleviate the inflation pressure to a large extent.
That is very important. And on the other aspect of these, we often tend to forget that in 2008, when the financial crisis happened in the United States, it was the China-U.S. cooperation that ultimately contributed to the final solution. We should keep this in mind because the U.S. is now facing another financial crisis, as we all know that the financial/debt bubble is a huge threat to the US financial markets, due to the Federal Reserves’ expansionist monetary policy. The consequences of such rising inflationary pressures are such that if the Federal Reserve changes its interest rate cap or its loose monetary policy directions, the financial market bubble will burst.
So now, the U.S. urgently needs China’s assistance to face up to this new challenge, and to face up to the next financial crisis. That's why I think the Biden administration has been urgently asking for Chinese cooperation, not only in trade, but also in terms of fiscal policies and to stabilize its financial markets.
Einar Tangen: Let's frame these terms in a larger timeline. Donald Trump was elected based on his promise to make America great again. His claim was that America had been victimized by its neighbors, allies, and competitors, particularly by China.
He implemented a get-tough policy, not only on China, but the rest of the world, using unilateral tariffs to try to force trade deals more favorable to the U.S. He said his policies would reduce the trade deficit and bring millions of jobs back to America. However, his policies increased the trade deficit, didn’t bring jobs back and added trillions of dollars to the already engorged national debt. To be blunt, Donald Trump's entire economic plan was a massive failure.
With inflation going up, low opinion polls and a series of domestic and foreign policy gaffes, the crisis at the border, the retreat from Afghanistan and the handling of AUKUS, Biden is desperate to look like a leader and tackle inflation. But he faces a political problem: How do you look tough on China while reducing or getting rid of the failed Trump tariffs. He knows the Republicans are in the weeds waiting for any sign of weakness towards China, but he has few real choices. His plan has been to get Corporate America to make the case for him, using carefully orchestrated hearings presided over by the USTR Katherine Tsai.
It shouldn’t be too hard; studies show that American consumers are bearing 95% of the burden of these tariffs. If he is successful, it will help with inflation, increase sales and exports, create high-paying jobs that were lost because of the tariffs, and also ease pressure on shipping and logistics.
It’s no secret that there is a significant amount of extra shipping being done to circumvent the tariffs. Instead of things going from the U.S. to China, or the other way around, things are sent to a third country, where the origins are changed, and then sent to its final destination.
In terms of technology, it is doubtful that Biden will do anything more conciliatory. Before the summit, he signed bills excluding Huawei and ZTE from getting licenses to sell telecommunications equipment in the U.S.
As an aside, it is surprising that ZTE and Huawei haven't sued because there are ample constitutional grounds to challenge what is in essence a governmental taking without process or compensation.
To date, there has never been any proof that these companies comprise a security threat to the United States. It's past time for these companies to put the U.S. to the test and say, if you have proof, produce it, or desist from this kind of scurrilous attacks, and if they can’t, sue for damages. I think there are probably quite a few law firms who would be very interested in a case like that.
So, when we start talking about international political and economic relations, you can see that for the U.S., it's one step forward, two steps back.
Biden’s fear of being called "Beijing Biden" has eviscerated his ability to lead. Every time he does something to be conciliatory with China, the next day, he has to walk it back or spin it.
Can you imagine if you had a neighbor who came over to your house, criticized you, your beliefs, the way you run your house and said that you had to pay him money and then asked you to help him do something great for the neighborhood? The irony being that, while this neighbor is criticizing you, his house is crumbling from neglect and his children are killing each other, meanwhile, yours is in good repair and the family is united.
Q: On a related note, the U.S. just declared that it will not join the CPTPP after the summit. How will Japan, a key American ally in the Northeast Asian region, perceive this message?
Einar Tangen: It's not just Japan who's scratching his head. TPP was the US grand plan to create a major trade agreement to counterbalance China’s BRI and RCEP. Donald Trump took the U.S. out. His plan was to use America’s political, economic and military dominance to force bilateral trade agreements on friends and foes alike.
At this point, Biden is too politically timid to join as the U.S. would not be able to get the favorable terms it had before included. But by continuing to rely on bilateral trade agreements and America First policies, he is alienating the countries he is trying to recruit to contain China.
For example: Canada and Mexico are scratching their heads, because Biden says, "Let's be friends, let's work together," and by the way, America First means you second. It means that we, in the U.S., are going to interfere with your country's ability to produce things and send them to us, because it's not good for us.
Once again, this is a "good neighbor" issue. Imagine your neighbor comes over and says, "I don't want to help you, I just want you to help me."
Imagine you are Australia. The Australian government is completely backing US policy, saying we'll fight over Taiwan; we will buy your $100 billion worth of nuclear-powered submarines, which will be outdated in 20 years by the time we get them; we will be tough on China. Meanwhile, a lot of Australia’s lost trade with China has been shifted to the U.S. under the Phase One trade deal.
At some point, some politicians in Australia are going to wake up and say, "Wait a second, the U.S. is telling us to do these things and we are losing money, while they're eating our lunch."
Imagine how the French feel about AUKUS. I guess we don’t have to imagine, as they have been quite clear about it.
The UK is counting on the U.S. to help them in their post-Brexit economic catastrophe, but where is the money?
Tell me where is the U.S. putting US money to help other countries? It's quite the opposite. The richest, most powerful country on earth is saying "we're a victim, and you have to help us."
A bit difficult to say to destitute developing countries in Africa, South America, South Asia, and other places around the world. They have no vaccines, only debts, ruined economies, and hungry people.
The Biden pitch, like Trump’s before him, is that somehow you should feel sorry for the U.S. because it is the true victim.
Ding Yifan: Actually, CPTPP, like TPP, was originally arranged by small countries in the Asia Pacific region. The Asia Pacific has the biggest supply chain in the global economy, so, all these economies, to some extent, are closely connected by the supply chain.
The idea was to make these production and value chains more solid and effective. A good idea would be building a large efficiently connected free trade zone in these areas. But the Trump administration said that, for political reasons, they have to withdraw from TPP, because TPP incentivized globalization, which was taboo for Trump’s voters. That is why the U.S. decided to withdraw from TPP.
Japan decided to take over after the US withdrawal and established the CPTPP with former member states of TPP. But today, without China and the United States, the two biggest economies in the world, the CPTPP cannot play its role as actively as once expected. That’s why when China requested its admission to the CPTPP, the Chinese initiative was welcomed by most of the countries, except for Canada and Mexico, because they have obligations and duties dictated by the free trade agreement they have with the United States.
Except for those two countries, all other member countries of CPTPP welcome China's inclusion into the CPTPP because China’s participation in the CPTPP could enlarge and consolidate the supply chain in these areas. It will make the operation of the supply chain in the Asia Pacific region more consistent, more effective, and more efficient.
Globally speaking, the supply chain in the Asia Pacific is arguably the most complete, the most sophisticated, and the most effective one in the world. And if China can join, it will make the Asia Pacific the most dynamic and competitive region worldwide in terms of international trade. That's why China is so active in becoming a member of the CPTPP.
I believe that China would also welcome the United States joining the CPTPP, because that will help the Chinese solve a lot of trade disputes with the United States. Because the CPTPP, in a sense, is a truly free trade arrangement, as there is an arbitration mechanism. It's more effective and efficient than the WTO. It has its rules. It has an arbitration system. It will settle all these trade disputes when one emerges. So that will be perfect if China, the United States, and all these countries involved could join the CPTPP.
Q: Now, I want to turn our attention to some abstract ideas, for example, competition. During the summit, President Biden said that he wanted to avoid conflicts with China and instead talked about competition. But the idea of competition is often perceived differently in the US and Chinese contexts, because China has rejected the idea of using the term "competition" to frame its relationship with the U.S. Do you think that the two sides after the summit have finally come to the same page?
Ding Yifan: I think that the notion of competition is not so extraordinary in international relations.
There is always a sort of competition among great powers in the world. Also, there is competition in normal market economies. If there is no competition, the market will be reduced to nothing.
Competition is a key factor that allows a market to become very efficient and effective. If, for example, it is necessary for the responsible authorities to intervene from time to time, to break up monopolies, it's only because competition in the market has been interrupted. There must be rules and regulations introduced to break monopolies, so firms and enterprises can compete again, thus allowing market forces to play their full roles.
I think that to some extent, in international relations, competition should not be considered a bad element. It is often a good element that spurs all these powers to develop their domestic momentum. The larger competition then becomes to compete on the international level, to make the society and people better off.
While currently, if Chinese people or Chinese leaders have a different perception of competition, it is because we found that fierce competition, the kind of competition in which some US politicians engage to carry out some dangerous behavior vis-à-vis China, has led the bilateral relations between the two countries onto a very dangerous path. This, in essence, is not really a competition. It will bring us to a sort of standoff or confrontation, while the next step of confrontation will be war. I think that's something that concerns the Chinese leadership.
Einar Tangen: I completely agree with Professor Ding’s assessment of healthy competition versus destructive competition. But I want to put it in a larger frame and step back. The reason that we have this competition and that we're even having this discussion about America and China is that for the last 40 years, China has been succeeding with a system that the U.S. doesn't like. Meanwhile, the U.S., under its own system, is in disarray. So existentially, if you think you have the "right" system, but you continue to fail, and somebody else has the "wrong" system, and they continue to succeed, you don't have many choices. But very few are willing to step back and say, America needs to look at its assumptions, to see if there are flaws. Questions like, how are we operating in the world, how are we perceived, is it possible that there are other means or other ways of achieving prosperity? But, instead of doing that, the U.S. has been attacking China, blaming it for its domestic and international failures.
It’s like Donald Trump. When he lost the election, he immediately claimed he was cheated out of it. He doesn't have any proofs, but just keeps repeating the same lies, until people think there is something to them.
It makes an attractive story. I didn't lose, I was cheated. So this, in essence, is what is at the basis of the US ideas about "competition."
The U.S., like Donald Trump, feels that it is always the victim, rather than the perpetrator, that they are owed their pound of flesh, and entitled to get it in any way they can.
This is the only way I can account for this kind of zigzagging, saying one thing, then the next day walking it back. It is not about being rational. It is about an emotional appeal, fanned by a willing media. Somehow China is always the bad guy and should be blamed for everything that is going wrong in the United States, meanwhile, very little attention is being paid to what the U.S. is doing, and not doing, which is causing its divisions and demise.
Ding Yifan: Yes, I think that to some extent, the US strategists, or the US political circles, over-estimated the role that the system plays in the success of China’s economic development, or in the "demise" of the US society.
The political system plays a certain role. But it's not the end of history. To some extent, the United States has committed a serious assessment mistake. They believe that they won the Cold War because of their system.
In China, while we have had tremendous successes, since the reform and opening to the outside world, our system hasn’t changed since the founding of the People’s Republic and the Mao era. But we have adopted different policies. We, in China, see the policies rather than just the system as the means of successful economic development. So, while both are important, we believe policies play an equally important role in development, as systems do.
Some US politicians don't want to recognize the importance of policies. You may have a good government; you may have a bad government that makes irrational decisions about trade, investment, and development. But you cannot blame or attribute all your successes or mistakes to your system. It's an overestimation of the role that the political system can play in the failure or success of your public policy.
This is a key point in the difference between Chinese analysis and American analysis about the story of Chinese success. So the competition between the two systems, is, to some extent, sort of an illusion. It's not a real competition. The real competition is between public policies. Even with the right political system, if you make a wrong policy decision, you won’t be successful, right?
Q: Yes. But speaking of the reform in the US system, it is a time-consuming process in order to get the right policy out. This is how their system was designed in the first place. Now it's polarized and the way they choose to get around with it is just to play this blame game on China. So we'll see what's going to happen. My last question is: Do you consider this meeting productive? One of the main questions that have been asked repeatedly over the past years is do you think the U.S. and China are heading into a new Cold War after what happened in the summit?
Einar Tangen: Both leaders said that they don't want a Cold War, but with the actions afterward, with all things happening with Taiwan, the F-16 Vs, these statements about China, it's really hard to see how it can be avoided. You can't, as I said, go back to the neighbor analogy: I can't go to your house to complain about you, threaten you and then say, "Let's work together." It’s just not going to work. President Xi Jinping has sent that message a number of times. It says, if we work together, we have to have some semblance of civility and trust. This isn't the Congress or the House of Commons, where there is more theater than reality. This is international relations and the fate of peoples and countries, and the world depends on communications, accommodation, and cooperation. Countries cannot work out their issues on the public stage. We're at a global inflection point, facing an extinction level of crises, from dealing with the health and economic fallout of COVID-19, to an impending economic bubble that is about to burst, while people are starving.
There seems to be no sense of responsibility from the US side. Looking at what Biden said, he talked about guard rails and US policies, not how to get together. He got upset, or I should say his administration got upset, when Xi said "old friend," making an elaborate issue out if walking it back the next day. I mean, what's wrong with somebody calling you an "old friend"? It doesn't mean that you're going to give away the store, it's not like Donald Trump and Putin. This is a situation where you have two mature leaders who are supposed to be getting together and helping to guide the world at a time when it is in crisis. No one really wants a Cold War. But Cold Wars aren't about saying there's a Cold War or not. It's about the actions of those involved. If the U.S. keeps pressing China’s hot buttons, especially when it pertains to Taiwan, it is playing with Beijing’s red line. Not as many in DC believe it is just a card. It's amazing to me how many smart knowledgeable people there are in Washington who persist in this idea that using Taiwan as a pressure point is somehow a way of distracting or containing the mainland of China. It's not. It’s just really, really dangerous.
Ding Yifan: I think that if you take the criteria of the last Cold War between the U.S. and the USSR as a reference to today's relationship between China and the U.S., we are not in a Cold War. You cannot view this relationship with the United States in that way, even if sometimes we are in a confrontation. The relationship should not be approached with a Cold War logic. The Cold War mentality dictates that the fundamental objective of the two parties involved is to quietly make the adversary disappear. It’s a zero-sum game where one’s success is achieved at the expense of the other’s failure. Well, in terms of today's relationship between China and the United States, I don't think that China wants the United States to be destroyed or fail. This is not China’s goal either, because for many years, the United States used to be China's biggest export market. And for many years, China has been receiving massive capital flows from the U.S. So China is, to some extent, a large beneficiary of the United States. China has no reason whatsoever to reverse this kind of relationship. The United States, as well as American people, like Einar Tangen, are welcomed in China.
After China joined the WTO, Corporate America derived huge profits from the Chinese market, so China is not an adversary; China is a partner for cooperation. China has offered a lot of opportunities for American enterprises. Tesla created its biggest factory in the world in Shanghai. This shows China continues to be a good opportunity for Corporate America to benefit, to take advantage of globalization, particularly in the Asia Pacific supply chain. That’s something very important. There’s nothing to do with Cold War. There’s nothing comparable to the relationship between the Soviet Union and the United States during the Cold War era. So even there are some areas of conflicts or confrontation, even there are a lot of strategic considerations in the United States because of China's rapid rise, those concerns are manageable. We need to believe that our relationship is so intertwined that any calculated or malicious strategic considerations cannot sabotage it or our common interests.
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