As much as the virtual summit meeting between Presidents Joe Biden and Xi Jinping , spotlighted multiple points of continuing strategic dissonance between the U.S. and China, it equally appeared to underscore in their minds the need for them to find common ground on contentious issues including trade and tensions surrounding Taiwan and the South China Sea. The summit itself was a long time coming, given that Mr. Xi has not been able to travel abroad owing to the onset of the COVID-19 pandemic, and Mr. Biden entered office around that time too. Further, in March 2021, at a meeting in Anchorage, Alaska, between senior officials from both countries, a heated exchange ensued after U.S. Secretary of State Antony Blinken said that without the rules-based international order there would be a “much more violent world” and that Chinese activities in Xinjiang, Hong Kong, and Taiwan, threaten that order, and were not internal matters. In that context, it is unsurprising that even though the summit meeting yielded no major breakthroughs, Beijing was quick to claim a diplomatic victory, with Chinese state media proclaiming, “Biden reiterates he doesn’t support Taiwan independence.” Such messaging is almost certainly directed towards a domestic audience given that Mr. Xi is consolidating power to secure a third term for himself, a process that will culminate next year in the CPC’s 20th Congress.
At the top of the policy agenda that is causing bilateral friction is trade. After the bruising trade war with China prior to 2020, under a Trump White House, relief came in the form of the Phase 1 Trade Agreement, which requires that China buy $380 billion worth of American goods by the end of 2021. That has not happened, according to some analysts, in part owing to a shortfall in orders from Beijing for Boeing aircraft in view of the aviation slowdown. Yet, compromise may not be far away in this space, as the U.S. Trade Representative hinted that the Trump-era practice of permitting exemptions for certain goods from trade tariffs may be resumed. On Taiwan’s independence, while the U.S. post-summit readouts suggest that Washington is adhering to its long-standing policy in this matter — that it acknowledges but does not recognise Beijing’s claim over Taiwan under the One China policy — the Chinese side indicated that Mr. Xi said, “It is playing with fire.....” Such comments likely signal that China will respond robustly to any western moves seen as strengthening Taiwanese independence, for example through direct arms sales to Taipei. Both sides will have to be even-handed in managing their conflicts on trade and regional tensions or else risk these issues spilling over into the global arena and disrupting the fragile ongoing recovery in economic growth and public health.