The China-is-not-Russia Summit
November 16, 2023
On November 15, the US and China established new rules to regulate their economic rivalry and created open-line communications to avert military clashes. The two superpowers are not locked in a “dangerous” geopolitical conflict, but they wage a geo-economic “war” which, by the way, the United States has already won hands-down. China languishes in recession while America’s economy booms. But the two attempt a reset, now that Xi has distanced himself from Putin’s geopolitical warfare. This initiative was launched by Treasury Secretary Janet Yellen in April, who extended an olive branch in a speech by saying “the world is big enough for both of us”. Bilateral meetings ensued and a nasty divorce was avoided despite Russia’s continuing attempts to divide them. The Summit went smoothly, with some irritants addressed, but The Wall Street Journal remained skeptical in its editorial dubbed “The Biden-Xi Truce of the Moment”. In essence, the paper says the meet-up was helpful but not definitive. “Both sides have reasons at the moment to appear to be getting along better. Mr. Xi needs foreign investment and export markets. Mr. Biden wants to smooth relations to avoid another security crisis in a world that already has too many.”
For two generations, America and China have had an economic “marriage” made in heaven. China, in essence, became America’s Dollarama store, where cheap goods and services were available, while America became China’s wallet, investing in its economy and buying its exports. This symbiosis enabled China to pull off an economic miracle, leaving Russia in the dust, and helped America grow by leaps and bounds. Unfortunately, a few Chinese players began to cheat by stealing intellectual property, hacking and industrial espionage, and dumping goods into the US market. Naturally, American businesses became irate and President Donald Trump launched a tough trade war in 2018 by imposing tariffs and export bans. China retaliated, then in 2022, Biden passed the CHIPS and Science Act barring China from obtaining certain semiconductor chips made with US equipment to slow Beijing's technological and military advances. Tensions increased.
Then Russia invaded Ukraine and placed the trade-dependent China in an untenable position. Since 2013, Vladimir Putin has described their connection as a “special relationship”. Their leaders met 42 times since and formed a “de facto” alliance around certain trade issues, but not military ones. However in 2022, they parted ways after Putin coaxed Xi to sign a “no limits” partnership without informing Xi of his plans to invade Ukraine days later on February 24, 2022. Ever since, Xi has distanced himself from Putin by not providing military assistance and by publicly declaring China’s commitment to the sanctity of borders. That war worsened, and Putin’s terrorists started another in the Middle East, the Israel-Gaza War.
By late July 2023, Xi faced serious challenges economically and charted a new geopolitical course. He removed his aggressive, pro-Moscow foreign minister and replaced him with a moderate. In March, China announced a three-way diplomatic deal with Saudi Arabia and Iran, aimed at securing energy supplies in case his principal energy supplier, Russia, falls apart. On August 5 and 6, China attended Saudi Arabia’s conference with Ukraine and 40 other nations to stop Russia’s war even though Russia was not invited. “Chinese diplomats at a summit to discuss a potential resolution to the conflict in Jeddah, Saudi Arabia last weekend were keen to show that `China is not Russia’”, noted the Financial Times. All are significant shifts, but Xi has stopped short of openly renouncing Russia because China, like India, is importing its cheap energy and food.
Despite some geopolitical estrangement with Xi, Russia has continued its disinformation war to stir up divisions between America and China. It stokes anti-China sentiment in the US, raises fears that China’s naval buildup is designed to invade Taiwan, and propagates bogus “yellow peril” claims that China will overrun the world. For instance, just before the summit, The New York Times published a piece headlined: “Ukraine. Israel. Can America Support Two Wars and Still Handle China?” Russia also disseminates anti-American and anti-Western propaganda in China and throughout the Global South. But this campaign mostly misses the mark because Russia is run by spies with no interest in economics, only conquest and power. By contrast, America and China are sophisticated economic players and deeply dependent on business success, global trade and to one another. “We don’t want to decouple from China,” said Biden succinctly before the summit.
Of utmost concern to global trade and to both countries, and others such as Japan, South Korea and Taiwan, is keeping open the shipping “lifelines” to and from Asia and China. These must remain unimpeded despite competing offshore claims and a nest of navies now plying the South China and East China Sea regions. All these ships represent countries with declared interests, or claims, and there have been confrontations. This issue was on the summit agenda because, as Biden explained, both countries must “get back on a normal course of corresponding; being able to pick up the phone and talk to one another if there’s a crisis; being able to make sure our [militaries] still have contact with one another”.
The Summit will lessen tensions. America initiated it and Xi agreed to come to the United States for the meeting. Also important to note was that Xi stipulated that he also wanted to address, and meet with, prominent American business executives, investors, and owners while in the United States. This was also a good sign. His aim was to smooth out concerns about his government’s treatment of investors in order to get more business and generate trade. Xi, unlike Putin, puts economics before politics.
For that and other reasons, the importance of this Summit cannot be understated. It solidifies a commitment to free markets, restores the world’s most important trading relationship, but also pulls the rug out from under Putin’s World War III. After all, the “special relationship” was never a match: China has lifted its people from poverty in two generations and Russia has abused its people for centuries, allowing its national wealth to be siphoned away by oligarchs and military misadventures. Now to Beijing, America is its most valued relationship while Russia has become a gasoline station going out of business and selling cheap energy.
Months of work by American and Chinese leaders appears to have paid off. Xi acknowledged that their connection was “the most important bilateral relationship in the world” and that “turning our backs on one another is not an option and conflict would be unbearable”. Biden pushed for open-line communications, future meetings, and a ban on exporting fentanyl substances. Of course, the “marriage” will remain somewhat rocky, but a reconciliation is underway and the tone at the top was encouraging. At the very least, something very positive happened between the world’s two superpowers in a world otherwise filled with Russian warmongering, fanaticism, murder, and mayhem.