The Asia-Pacific Economic Cooperation (APEC) summit in San Francisco has become the backdrop for a pivotal meeting between President Joe Biden of the United States and Chinese leader Xi Jinping. The encounter, the first in a year, holds significant weight as the two world leaders aim to address escalating tensions and foster more excellent stability in one of the most crucial international relationships.
APEC’s Role in Geopolitical Dynamics:
APEC, comprised of 21 economies representing approximately 62% of global GDP and nearly half of international trade, has historically been a platform for economic cooperation. However, it has increasingly become a stage for strategic competition between the United States and China in recent years. As the world’s two most powerful economies, their interactions within APEC carry global implications.
Challenges and Strains:
The relationship between the U.S. and China has faced strains on multiple fronts, including disagreements over export controls, tensions related to Taiwan, conflicts in the Middle East and Europe, and a notable incident where President Biden classified Xi Jinping as a “dictator” in June. These issues and recent trade and investment limitations have contributed to a complex and delicate diplomatic landscape.
Treasury Secretary Janet Yellen emphasized the economic interdependence of the two nations, noting that a complete decoupling of their economies would be disastrous for both countries and the world. Despite recent restrictive measures, the U.S. and China maintain a significant economic relationship, with goods and services trade reaching almost $760 billion in 2022.
Economic Challenges for China:
China faces economic challenges, including a property crisis, a sector contributing one-fourth of its economy, and a decline in domestic consumption. The country recorded a foreign direct investment deficit in the July-September period for the first time since 1998, signalling potential difficulties in attracting and retaining foreign investments.
Agenda of the Meeting:
The Biden-Xi meeting is expected to cover a range of global issues, from regional conflicts such as the Israel-Hamas war, Russia’s invasion of Ukraine, and North Korea’s ties with Russia to broader topics like Taiwan, the Indo-Pacific, human rights, and the flow of fentanyl from China. Additionally, discussions on artificial intelligence, fair trade, and economic relations are on the agenda.
Diplomacy Over Breakthroughs:
While significant breakthroughs are not anticipated, the meeting aims to inject more excellent diplomacy into the relationship. The leaders must promise ongoing discussions on critical issues, including climate change, global health, economic stability, and counter-narcotic efforts. The potential resumption of military-to-military channels may also be explored.
Iran and Geopolitical Tensions:
Given the global geopolitical tensions, the meeting allowed President Biden to urge President Xi to discourage Iran from expanding the conflict in the Middle East. The U.S. believes that China, as a major buyer of Iranian oil, holds considerable leverage over Iran, a key supporter of Hamas.
President Xi seeks assurances from President Biden, particularly on issues like Taiwan, a commitment to avoid starting a new Cold War, and guarantees that the U.S. will not suppress China’s economic growth. Addressing tariffs on Chinese goods, sanctions against Chinese companies, and export restrictions on high-tech products are among China’s primary concerns.
As the APEC summit unfolds in San Francisco, the meeting between President Biden and President Xi Jinping can shape the trajectory of U.S.-China relations. Both leaders are tasked with navigating a complex geopolitical landscape, balancing economic interdependence with strategic competition, and addressing pressing global challenges. The outcomes of this meeting are poised to influence not only the bilateral relationship but also have far-reaching implications for international affairs in the years ahead.