A virtual meeting between U.S. President Joe Biden and Chinese leader Xi Jinping helped alleviate growing tensions between the two countries, but did not make progress in resolving trade war disputes between the United States and China.
The trade war between the United States and China, which began in 2018 under former U.S. President Donald Trump, has resulted in both countries paying higher taxes to import goods from the counterpart.
Rising import tariffs have caused supply chain disruptions that affect businesses and individuals worldwide. But at Tuesday’s summit, economic issues were left behind in geopolitics.
Biden spoke briefly about China’s “unfair trade and economic policies,” which are hurting American workers, but mainly raised concerns about human rights abuses in Xinjiang, Tibet and Hong Kong, and U.S. support for Taiwan.
In his opening remarks, Biden said to X: “It seems that it is our duty – as leaders of China and the United States – to ensure that competition between our countries does not lead to conflict, whether intentional or unintentional. Mere simple competition.”
Shehzad Qazi, CEO of China Beige Book International, described “direct competition” as “just a great way to say that the US administration does not want an accidental war or military confrontation.”
“But so far, these terms have also become placeholders that the government doesn’t have a real Chinese strategy,” Qazi said.
According to Trivium China analyst Joe Mazur, there is a clear understanding in the White House that Beijing is not going to back down on many of the core issues that are creating tensions in bilateral relations.
Instead, the United States is looking for areas that could support limited bilateral cooperation with China while strengthening its relations with allies and partners worldwide.
“This is a significant departure from Donald Trump’s‘ America First ’foreign policy, which envisions the U.S. effectively taking over Chinese power and making little or no effort to find common ground with Beijing,” Mazur said.
“As part of this new strategy, Washington is increasingly seeking to counter China’s economic influence by promoting its own trade and infrastructure initiatives. This will, of course, lead to more economic competition between the United States and China, but may benefit countries that choose economic partnership with Washington, Beijing or both. .
At the summit, Biden asked the Chinese to release crude oil reserves to help stabilize soaring global energy prices, the South China Morning Post said on Wednesday, referring to a person familiar with the matter. China was “open” to the idea, but had not committed to the request, a Hong Kong newspaper said.
In January 2020, Trump and Xi signed a first-stage trade agreement that called for structural reforms in China’s economy and trade practices in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange markets.
Under the agreement, China must commit to increasing its purchases of U.S. agricultural products, industrial products, natural resources and services in the coming years.
Over the past year, however, China has fallen short and bought only about 60 percent of the products it had agreed to under the agreement. The Biden administration has said it will stick to the first-stage agreement and expects Beijing to stick to its trade commitments.
“The White House has already announced that in the area of trade policy, it will monitor China’s compliance with the first-stage agreement,” Qazi said. “Furthermore, we know that U.S. National Security Adviser Jake Sullivan is working to launch a new 301 investigation into China, which could lead to even new tariffs. Nevertheless, several centers of U.S. government power have fought for this policy, so no clear next steps have emerged.
Although Biden did not long too much for economic issues, Xi raised the issue of trade by appealing directly to American companies and urging the United States to stop stretching the concept of “national security” to stifle Chinese companies.
Xi, who called Biden “my old friend,” compared the two countries to ships that have to navigate the ocean without colliding, and said the countries “should respect each other, live in peace side by side, and engage in win-win cooperation.”
Xi also commented on easing trade restrictions to speed up the recovery of both economies.
“There may be something – especially lowering or eliminating tariffs can help curb short-term inflation, which is a constant political spike on the side of Biden’s administration,” Trivium China analyst Taylor Loeb said.
A study commissioned by the US-China Business Council in January found that the trade war had cost the United States 245,000 jobs, while cutting tariffs on both sides would create 145,000 jobs by 2025. The Oxford Economics report also predicted that “significant decoupling” from their economies would reduce U.S. gross domestic product (GDP) by $ 1.6 trillion over the next five years.
Loeb said the tariff reductions are likely to come at some point, but not all at once.
“The U.S. will eliminate tariffs in areas it considers most economically beneficial and least problematic from a national security perspective,” he said.
“The reality is that we are at the beginning of a major reassessment of global supply chains. The current disruption is much related to the pandemic, but while Covid is in the past, the simultaneous global drive for self-sufficiency and “secure” supply chains – led by the U.S. and China – is putting a heavy strain on established supply chains.
No joint statements were issued at the end of the three-and-a-half-hour meeting. Instead, each government issued its own statement highlighting long-standing grievances without signs of compromise.
“Basically, the summit didn’t change much about the state of U.S.-China economic relations,” Loeb said. “The United States continues to explore how it wants to define an international trade policy that reduces dependence on China. Beijing will do the same, but in the meantime would like trade relations to return to the pre-Trump status quo. It won’t happen. “
While it is still too early to know whether the meeting will lead to direct financial results, Mazur believes it is certainly possible.
“It remains unclear how much loose Washington is willing to cut Beijing on trade issues, especially given the fact that China is still far behind the purchases promised in the first-stage trade agreement,” he said.
“Overall, however, cooperation on economic and trade issues now seems to be a greater opportunity than a few months ago.”