Biden and Xi convened in San Francisco for the Asia-Pacific Economic Cooperation conference after an approximate one-year absence. Jake Colevin, president of the National Foreign Trade Council in D.C., voiced the expectation of U.S. businesses that the fresh attitude might develop into a new status quo for the economic connection. Gabriel Wildau, managing director from Teneo, highlighted in a Friday commentary the notion that full detachment is no longer regarded as a consideration and that companies may invest in China, especially in non-critical sectors.
Following their meeting in San Francisco on the sidelines of the Asia Pacific Economic Cooperation conference last week, U.S. President Joe Biden and Chinese President Xi Jinping have set a bottom line for the relationship which should decrease uncertainty for businesses, Wang Dong, the executive director of the Institute for Global Cooperation and Understanding at Peking University, stated in a press briefing Tuesday. He went on to describe the summit as providing a "very clear signal" of the two nations' commitment to a "recouple", based on "reciprocity and mutual respect". Ultimately, according to him, the U.S. and China are seeking to cooperate in areas where possible.
Jake Colvin, president of the Washington, D.C.-based National Foreign Trade Council, stated that the hope for U.S. businesses is that the new tone between leaders can create a more beneficial economic relationship, with some of the tariffs and retaliations dropping away. Conversations between President Biden and President Xi did not modify the U.S. export controls, but there was an agreement to reestablish the military-to-military talks that had been suspended. In response, Gabriel Wildau, managing director at Teneo noted that this meeting implied full decoupling was not feasible and that investments in China will still be allowed in non-sensitive industries. The Biden administration is striving to keep U.S. investments and businesses away from Chinese tech that could support military operations, but the majority of trade and consumer-oriented businesses are unaffected.
As a result of the Biden-Xi meeting, there was action, such as the resumption of more flights between the U.S. and China. On Tuesday, a direct flight from Beijing to Washington, D.C. was launched as per reports from state media. According to Ian Bremmer, president of Eurasia Group, many decisionmakers experienced a swift change with Chinese interlocutors, including promises of imminent licenses, clarity on anti-espionage rulings, higher-level access to Chinese decisionmakers and favorable treatment by the Chinese media. Moreover, Mastercard's joint venture in China got approval from the People's Bank of China to start processing domestic payments, a process which has taken close to four years since its application was approved in principle.
Following his meeting with Biden, Xi addressed a gathering of leading American business executives at a dinner, where he examined whether the two countries are "partners or adversaries". Gary Dvorchak, managing director of Blueshirt Group who attended the event, commented positively on the outcome. "I was encouraged to see that multiple companies are invested in the idea of the US and China having a good relationship," Dvorchak said. "It was a potential disaster if the event was filled with hostile attitudes. We were luckier than we expected." Looking ahead, Dvorchak likened the dinner to a wedding. He asked "the marriage may be happy at the moment, but how will it turn out in the future?"
Eurasia Group stated that it is more probable that the US-China affairs will experience a "managed decline" until the end of 2024, with limited chances of a "substantial improvement". As the US presidential election is due in November 2024 and Taiwan's self-ruled elections will be held in January, the Chinese government believes Taiwan to be a part of their nation without any right to hold independent diplomatic ties. Jin Canrong, positioned as the Deputy Dean, Professor and Doctoral Supervisor of the School of International Studies at Renmin University of China as well as the Deputy Director of the Center for American Studies at the same university, expressed concern regarding how long the positive atmosphere, established by the Biden-Xi summit, will last given the approaching elections. He criticised the US as they promise often but act little.
Issues that have been around for some time remain unresolved for American companies operating in China, and these agreements do not get finished in a short period of time. Reports in the media suggested that at the Biden-Xi summit a statement about the Chinese government recommitting to buying Boeing 737 Max airplanes could be made, nonetheless, nothing of this sort has happened. CNBC asked Boeing for a response, but it has not yet given one.
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Colvin remarked that although the gathering did not produce any flashy products, it was successful in establishing a fresh foundation for collaboration and finding solutions. Additionally, he noted companies will be attracted to risk reduction and diversifying their supply chains, and ultimately will be guided by what is occurring in China.
Correction: This story has been revised to include Wang Dong's statement that there is an unmistakable sign that both sides are determined to "reconnect, somehow."
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