Since the start of his administration, President Biden has tried to use "diplomacy" to try and smooth things over with the Chinese (an attempt to coax Beijing to make good on its "commitments" on climate change, cybersecurity and a host of other issues) while simultaneously pursuing some of the same aggressive policies pioneered by President Biden's predecessor (which have proven popular with the American people).
But after several rounds of high-level talks involving Secretary of State Antony Blinken and Biden's climate envoy John Kerry (a veteran of the Obama Administration's talks with Beijing), the two sides remained at an impasse.
So, at President Biden's urging, President Xi and his American counterpart held their second call since Biden's inauguration on Thursday night. Unsurprisingly. The timing isn't exactly a surprise: With China and Russia closing in after America's embarrassing withdrawal from Afghanistan, President Biden needs to try and court Chinese cooperation now more than ever.
The "broad, strategic discussion" lasted 90 minutes, with the two leaders discussing "the responsibility of both nations to ensure competition does not veer into conflict," according to Bloomberg, which cited details published in the Chinese press.
"The two leaders had a broad, strategic discussion in which they discussed areas where our interests converge, and areas where our interests, values, and perspectives diverge," the White House said in an account of the conversation. "They agreed to engage on both sets of issues openly and straightforwardly,” it added, saying they “discussed the responsibility of both nations to ensure competition does not veer into conflict."
Per the FT, several senior-level administration officials explained that direct contact with President Xi is necessary to further any diplomatic discussion since the Chinese leader has centralized power to such an unprecedented (since Mao) extent.
Chinese diplomats seemed "unwilling to engage in serious or substantive conversations" during prior high-level talks. “What we’ve gotten is the usual talking points, which are more designed for propaganda purposes,” the official said. “Xi has really centralized power in some pretty marked ways...engagement at the leader level is really what’s needed to move the ball forward.”
Antony Blinken, US secretary of state, and national security adviser Jake Sullivan met Yang Jiechi, China’s top diplomat, and foreign minister Wang Yi in Alaska in March for talks that included an extraordinary public spat. Wendy Sherman, deputy secretary of state, held a meeting with Wang in Tianjin last month. And just last week, Biden’s climate envoy John Kerry held talks with Chinese Foreign Minister Wang Yi.
During the call, President Xi lamented that the relationship between China and the US had been "difficult" for some time. And that while he's certainly ready to cooperate on issues of mutual concern, the US needs to "respect" some of China's "core concerns".
"China policy adopted by the United States for some time has caused serious difficulties" in relations, according to state broadcaster China Central Television. He said China was ready to cooperate on issues ranging from the global economy to climate change, but that it needed to be done “on the basis of respecting each other’s core concerns."
Xi emphasized it was necessary for the two countries to bring relations "back on the right track," saying that building good ties wasn’t a "multiple choice question" but a "mandatory question." China said the two sides agreed regular communication between heads of state is important to boosting ties, while U.S. officials were noncommital on future exchanges.
The message seems obvious: Until Biden decides to suspend the Trump-era tariffs on some $300 billion in Chinese goods, Beijing won't be much help on climate change, human rights in Xinjiang, or any other issue, including, perhaps, Afghanistan.
A spokesman from the Foreign Ministry stressed that the US must "inject more positive dynamics" into their relationship.
Later on Friday, China’s Foreign Ministry spokesman Zhao Lijian said Xi stressed that officials from both countries should seek to "inject more positive dynamics into the relationship," reiterating that it needed to be on the basis of respecting core interests and "properly managing differences."
According to BBG, the Biden Administration is still "reviewing" its policy stance toward China, including the tariffs on some $300 billion in goods annually.
The White House is still reviewing its overall China policy, including how to proceed with roughly $300 billion in tariffs facing Chinese imports and a trade agreement that was struck under the previous administration. The review could be concluded and its outcomes unveiled in the near future, the official said.
The US official criticized China’s linking of transnational and bilateral matters, essentially holding hostage any progress on areas like climate change while demanding unrelated concessions in return.
Since the last call between the two leaders in February, the bilateral relationship between the world's two largest economies has grown increasingly frosty, as Washington and Beijing have clashed on human rights, cybersecurity and - of course - the origins of the coronavirus. While officials said there were no concrete plans for an in-person meeting, the next best opportunity would be during the G-20 meeting in Rome in late October, though President Xi hasn't committed to attending that meeting, citing COVID protocols.
As for whether Biden will make good on the concessions - let's just say now is the time for all those dealings with Hunter to pay off for China.
Markets were broadly optimistic about the call. Treasuries drifted lower, with yields rising modestly across the curve. On the currency side of things, Bloomberg's Mark Cranfield said the dollar could head lower against the offshore yuan as traders interpret the call as a sign of a potential resent between the US and China.
If President Xi does agree to talks on the sidelines in Rome, the market will likely interpret that as a sign that a breakthrough could be on the horizon.