"No Major Surprises" - Five Main Takeaways From The Xi-Biden Virtual Meeting

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by Tyler Durden
Tuesday, Nov 16, 2021 - 08:41 PM

As noted earlier, Chinese President Xi Jinping and US President Joe Biden held a virtual meeting Monday evening US time / Tuesday evening Asia time. Public statements from the two countries were broadly consistent on what they relayed in terms of substance, but differed considerably in length and emphasis. No major deliverables were announced, consistent with expectations going into the meeting, though as Goldman economist Andrew Tilton writes, "do see the possibility of increased bilateral exchanges and some US ‘tariff exclusions’ in coming weeks or months."

As BBC notes, the talks were the most substantial since Biden took office in January. Both sides emphasized the two men's personal relationship and the summit was an attempt to ease tensions. But they could not escape one of the most sensitive topics: the self-ruled island of Taiwan.

China sees Taiwan as a breakaway province to be reunified with the mainland one day. While the US recognizes and has formal ties with China, it has also pledged to help Taiwan defend itself in the event of an attack.

China's state-run Global Times said Xi blamed recent tensions on "repeated attempts by the Taiwan authorities to look for US support for their independence agenda as well as the intention of some Americans to use Taiwan to contain China".

"Such moves are extremely dangerous, just like playing with fire. Whoever plays with fire will get burnt," it said. The White House countered by saying that Biden "strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait".

Despite the strong words on Taiwan, the meeting began with both leaders greeting each other warmly, with Xi saying he was happy to see his "old friend" Biden, who in turn said the two had "always communicated with one another very honestly and candidly," adding "we never walk away wondering what the other man is thinking".

Xi said the two countries needed to improve "communication" and face challenges "together". "Humanity lives in a global village, and we face multiple challenges together. China and the US need to increase communication and co-operation." said Xi.

What else was discussed

The world's two most powerful nations do not see eye-to-eye on a number of issues, and Biden raised US concerns about human rights abuses in Hong Kong and against Uyghurs in the north-west region of Xinjiang. China accuses the US of meddling in its domestic affairs.

On trade, Biden highlighted the "need to protect American workers and industries from the PRC's [People's Republic of China's] unfair trade and economic practices". Xi also appeared to have made a strong comment on the issue, with Reuters reporting that he had told Biden that the US needed to stop "abusing the concept of national security to oppress Chinese companies".

Climate change was also discussed. Last week the two sprung a surprise by issuing a joint declaration to address climate change, at talks in Glasgow, Scotland.

* * *

This was the third time the two leaders have spoken since Biden's inauguration in January. The talks lasted three-and-a-half hours, longer than expected. Xi has not left China in nearly two years, since the outbreak of the Covid-19 pandemic.

Both men are facing domestic concerns, with Biden's poll numbers slumping in the face of inflation, the threat of coronavirus and the chaotic withdrawal from Afghanistan. Xi is tackling energy shortages and a property crisis.

Here are the five main takeaways from the summit, courtesy of Goldman's Tilton:

  1. Presidents Xi and Biden held a virtual meeting, the first few minutes of which were open to media. The meeting lasted for over three hours and the two countries released separate readouts (see here for the Chinese readout and here for the US readout). CNY strengthened against the USD and Chinese equity market rallied during the meeting but reversed most of the moves later in the day.

  2. There were some signs of a positive tone. Xi greeted Biden as an “old friend” (the two have met on multiple occasions over the past decade). Both sides stated the need to manage risks, with the US readout commenting that President Biden “noted the need for common-sense guardrails to ensure that competition does not veer into conflict” and the Chinese readout commenting,“non-conflict and non-confrontation is the bottom line that both countries must adhere to”.

  3. Some more challenging topics were also discussed, with Taiwan clearly receiving considerable attention. While President Biden underscored the US’s commitment to the “one China” policy, he also reiterated “the continued determination of the US to uphold commitments to the region”. The US readout commented on Xinjiang, Tibet and Hong Kong and human rights issues, whereas the Chinese readout called for the US to “implement its position of not fighting the ‘new cold war’”. On the economic front, President Xi also urged the US to“stop abusing and generalizing the concept of national security to suppress Chinese companies.”

  4. The readouts implied some potential areas for cooperation in future:
    - First, of course, was climate: the US readout noted “the two leaders discussed the existential nature of the climate crisis to the world and the important role that the United States and the PRC play”, while China’s readout quoted Xi as saying “Climate change can definitely become a new highlight of Sino-US cooperation.”
    - A second area where we might see initiatives includes “people to people” and diplomatic exchanges. The US readout indicated the two leaders “discussed ways for the two sides to continue discussions on a number of areas, with President Biden underscoring the importance of substantive and concrete conversations.” China’s readout reported that Biden said, “Our younger generation should be encouraged to get in touch with each other more and understand each other’s cultures, so as to make the world a better place.” Conceivably, these comments could open the door to adjustments in visa policies or even the eventual reopening of the Houston and Chengdu consulates, although presumably more negotiations would be required on both fronts.
    - A third topic was energy security – China’s readout suggested work “to jointly safeguard global energy security, strengthen cooperation in the fields of natural gas and new energy, and work with the international community to maintain the security and stability of the global industrial chain and supply chain”, while the US comment simply noted “the importance of taking measures to address global energy supplies.”

  5. There was no mention of the trade deal or tariffs in either readout, despite their major role in the US-China economic relationship at the moment, and despite the participation of both Vice Premier Liu He and Treasury Secretary Janet Yellen in the meeting. While a major breakthrough on this front was not expected, the lack of any commentary was mildly surprising. Still, targeted US “tariff exclusions” in response to requests by US companies remain a possibility in coming weeks and months.