In 1985, a young and carefree Xi Jinping embarked on his first trip outside of China to the United States. Fast forward to the present day, and the world has drastically changed. Now, Xi returns to San Francisco as the President of China, ready to meet with President Joe Biden at the Asia-Pacific Economic Cooperation (APEC) summit. The stakes are high for both leaders, as they seek to address critical issues that have strained the relationship between the world’s top two economies. From economic challenges to regional conflicts, Xi and Biden have much to discuss.
A Tumultuous Relationship:
Since their initial meeting, Xi and Biden have witnessed a rapid deterioration in China-U.S. relations. Highly contentious issues, such as the alleged Chinese spy balloon and Washington’s blockage of high-tech component sales to China, have heightened tensions. Additionally, the arms sales to Taiwan and support for the Philippines in the South China Sea disputes have further strained the relationship. Against this backdrop, both leaders recognize the urgent need to find common ground and chart a more constructive path forward.
Economic Challenges and Geopolitics:
China’s economy currently faces significant headwinds, with a severe downturn and rising youth unemployment. In October 2023, the country experienced deflation while foreign direct investment plummeted. Xi is eager to alleviate pressure on China’s economy and address concerns about Taiwan, an island that Beijing claims as its own. On the other hand, Biden, with the U.S. presidential election looming, seeks foreign policy victories. He hopes to secure Chinese assistance in resolving conflicts in Ukraine and Israel, meanwhile reestablishing de-escalation mechanisms between both nations’ armed forces.
Restoring Military-to-Military Communication:
Military-to-military communication between China and the U.S. has waned, particularly following prominent U.S. visits to Taiwan. Recent near-misses between naval vessels and aircraft have exacerbated the situation. Biden is determined to reestablish military ties, citing it as essential to U.S. national security. However, Chinese analysts argue that Washington has not effectively reciprocated these intentions. The absence of senior U.S. military officials at the Xiangshan Forum on regional security has been seen as a missed opportunity.
Negotiation and Concessions:
As the leaders engage in discussions, the contents of the negotiation table become crucial. Preliminary reports suggest that an agreement to curb the flow of fentanyl from China to the U.S. may be within reach. Beijing also seeks rollbacks in tariffs and sanctions but may have to settle for assurances of no new impositions. Additionally, Biden hopes Xi can leverage China’s influence with Iran to prevent further escalation in the Israel-Hamas conflict. Xi has previously demonstrated his peace-building efforts, notably facilitating talks between Iran and Saudi Arabia.
The Path Forward:
Beyond regional issues, Xi aims to position China as a global security player. Therefore, he seeks to address not only regional but also global challenges during the meeting. Progress on peace in Ukraine and Israel, even with its challenges, would represent a significant achievement for both leaders. However, the question remains: what concessions is the U.S. willing to make in pursuit of these ambitious goals?
As President Xi Jinping and President Joe Biden convene in San Francisco, the world watches with anticipation. The high stakes of this meeting reflect the urgent need to stabilize China-U.S. relations and address critical economic challenges and geopolitical conflicts. Both leaders have their respective goals and concerns, but finding common ground and reaching tangible agreements will be crucial to ensuring a more constructive and cooperative future between these superpowers.
Market Capital Research 