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Biden-Xi meeting sent important signal for US business in China

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U.S. President Joe Biden and Chinese President Xi Jinping at the Filoli Estate on the sidelines of the Asia-Pacific Economic Cooperation summit in Woodside, California, November 15, 2023.

Kevin Lamarque | Reuters

BEIJING — The meeting between U.S. President Joe Biden and Chinese President Xi Jinping last week laid out a record of the relationship that reduces uncertainty for businesses, analysts said.

Biden and Xi met for the first time in about a year in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.

“I think a great consensus has emerged from this summit,” Wang Dong, executive director of the Institute for Global Cooperation and Understanding at Peking University, told reporters on Tuesday.

“What you are receiving from this summit is a very clear signal from both countries that they are committed to what we can call a recoupling, as it were, on the basis of reciprocity and mutual respect,” he said. he declared. “I think it’s very important for both countries, but also for the global economy.”

Essentially, the United States and China are considering what it means to cooperate where they can.

“I think American businesses are hoping that this kind of new tone can translate into a new normal for economic relations, where there is a mutually beneficial relationship where China plays by the rules and where the United States and China can return to a more balanced relationship. a normal economic basis, that some of these tariffs and retaliations are removed,” said Jake Colvin, president of the National Foreign Trade Council, based in Washington, DC.

He said he attended the Asia-Pacific Economic Cooperation CEO summit in San Francisco last week.

In conversations with Xi, Biden did not budge on export controls, put in place for national security reasons. But a White House statement said “leaders affirmed the need to address the risks of advanced AI systems and improve AI security through U.S. government negotiations and China.

The two sides also agreed to resume military-to-military talks, which had been interrupted for more than a year.

“For the business world, the meeting demonstrates that complete decoupling is not possible and that investments in China remain authorized, at least in non-sensitive sectors,” Gabriel Wildau, CEO of Teneo, said in a statement on Friday. a note.

“The meeting shows that both leaders want to avoid a downward spiral and cooperate where interests align,” he said.

The Biden administration has sought to restrict U.S. investment or business relationships with Chinese companies that develop advanced technologies that could support military development. But U.S. officials have stressed that the vast majority of trade and consumption-related activities are unaffected.

Downstream messaging

As with official U.S. visits to China this year, the Biden-Xi meeting resulted in actions such as the resumption of more flights between the two countries.

For the first time since the Covid-19 pandemic, a direct flight to Washington, DC, took off from Beijing on Tuesday, state media reported.

“I’ve heard dozens of decision-makers tell me their versions of how their personal experiences with their Chinese interlocutors had suddenly changed: promises of imminent licensing long thought dead, clarity on anti-espionage decisions, access at the highest level to Chinese decision-makers, preferential treatment from the Chinese authorities. Chinese media, etc.,” Ian Bremmer, president of consultancy Eurasia Group, said in a note on Monday.

MasterCard announced Monday that its joint venture in China has received approval from the People’s Bank of China to begin processing domestic payments. The company waited almost four years for its request to begin preparations to be approved in principle.

Marriage versus marriage

After meeting Biden, Xi spoke at a dinner with top U.S. business executives during which he said the fundamental question was whether the two countries were “adversaries or partners.”

“I was very heartened that so many of the companies invested in the United States and China have positive relationships,” said Gary Dvorchak, chief executive of Blueshirt Group, who attended the dinner.

“In a negative U.S.-China environment, a lot of these companies could have stayed away. Why do I want my CEO to have a photo with Xi Jinping?” he said. “It would have been very easy for it all to be overwhelmingly negative and for no one to come forward.”

Looking further, Dvorchak compared the dinner to a wedding. “A happy day is a happy day. How’s the wedding going?”

Future electoral risk

Over the weekend, the Eurasia Group said it was now more likely that the United States and China would experience a “managed decline” in their relationship until the end of 2024, and a lower likelihood of “serious deterioration”.

But the consultancy sees no chance of a “substantial improvement”.

The US presidential election is scheduled for November 2024. The democratically autonomous island of Taiwan is due to hold its elections in January.

Beijing considers Taiwan to be part of its territory and has no right to conduct diplomatic relations independently. The United States recognizes Beijing as the sole Chinese government but maintains unofficial relations with Taiwan.

“It is doubtful whether this positive atmosphere can last very long with (the) presidential election next year,” said Jin Canrong, vice dean, professor and doctoral advisor of the School of International Studies at the University. Renmin University of China.

He called the Biden-Xi summit “very good,” with some consensus, but noted that in the long term, managing the relationship is “very difficult work.”

From a long-term perspective, there are doubts among the Chinese public about how the consensus reached can be implemented, “because our impression is that the record of the American side (which kept) his promise is very bad. but don’t do anything,” Jin told reporters on Tuesday. “He is also deputy director of the Center for American Studies at Renmin University of China and holds other positions.

No “brilliant deliverables”

Long-standing problems for U.S. business operations in China remain, and deals don’t happen overnight.

Although media reports that the Chinese government may use the Biden-Xi summit to announce its commitment to resume purchases of Boeing’s 737 Max aircraft, no such news has materialized. Boeing did not immediately respond to CNBC’s request for comment.

Read more about China on CNBC Pro

“This meeting did not produce any spectacular results,” Colvin said. “It successfully laid a foundation for the relationship and set a new tone for cooperation and problem-solving.”

“But I think companies will still need to focus on reducing risk and diversifying supply chains,” he said. “Ultimately, they will make their decisions based on the ground reality in China.”

Correction: This story has been updated to reflect that Wang Dong of Peking University said there was a clear signal that both sides were committed to “recoupling, of a certain manner “.

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