Addressing the Tensions Between China and the Rest of the World - The World News

Addressing the Tensions Between China and the Rest of the World

This article is part of our special section on the DealBook Summit that included business and policy leaders from around the world.


When President Biden met his Chinese counterpart, Xi Jinping, last month in their first face-to-face talks in a year, observers were watching for any hint of a thaw in relations. The leaders seemed happy to oblige.

“We have to ensure that competition does not veer into conflict,” Mr. Biden said in his opening remarks. “For two large countries like China and the United States, turning their back on each other is not an option,” Mr. Xi said in his. “Planet Earth is big enough for the two countries to succeed.”

That the leaders of two of the world’s most powerful countries, which have been fierce rivals, were talking at all was seen as a small sign of progress. But a separate gathering later that day was revealing about how the two nations are linked.

At a San Francisco hotel, Mr. Xi hosted a banquet with a group of top American business leaders, including Tim Cook, Apple’s chief executive, and Larry Fink, the boss of BlackRock, the giant asset manager. Mr. Xi received a standing ovation and declared that China welcomed global business and was an open market, despite policies and actions that have demonstrated the opposite and forced some companies to exit the country.

So many executives were willing to show their support because China remains important for global business, despite the challenges of operating there and the economic slowdown in the country. Last year, bilateral trade hit a record high of almost $691 billion, according to U.S. government data.

Yet tensions over everything from national security and trade to technology and the future of Taiwan are not going away. The Biden administration says China is the United States’ biggest national security threat, and Donald Trump, who imposed trade tariffs on Chinese imports when he was president, seems likely to be the Republican nominee for president next year.

Regardless of who wins in 2024, there is wide agreement that Beijing should be challenged. Although Mr. Biden continued some policies introduced by his predecessor, the two administrations have taken different approaches to countering China.

The Biden administration’s strategy has been built on three pillars: Cultivating alliances to help counter Beijing; competing better with China; and investing at home to bolster key economic sectors via policies such as the Inflation Reduction Act to accelerate the transition to electric vehicles and the Chips Act to increase semiconductor manufacturing.

In national security, the Biden administration secured a series of long-term agreements. It signed Aukus, a security agreement with Britain and Australia, to make nuclear-powered submarines available for the Pacific country. The United States rebooted the Quad security pact with Japan, Australia and India, a rising power seen as a regional bulwark against China. Mr. Biden also brokered a reconciliation between South Korea and Japan, ending decades of acrimony and signing a three-way military and intelligence-sharing pact.

The engagement has extended to commerce and trade, with the Netherlands and Japan agreeing to comply with U.S. export controls to China on advanced chip-making technology, despite the economic consequences for some of their biggest companies.

But a big question looms: How long can the United States maintain that united front? The Inflation Reduction Act offered huge government subsidies to encourage investment in renewable energy and technology. For Mr. Biden, the legislation represents a serious effort to transform the American economy. But it angered European governments, with the European Union saying it discriminates against the continent’s companies and may have violated World Trade Organization rules.

“The U.S. has done a better job with Asia than with Europe, and that reflects the fact that Asia was simply a bigger priority than Europe was,” said Noah Barkin, a senior adviser in the China practice at the Rhodium Group, a research firm.

Emmanuel Macron, the president of France, has warned that Europe must not blindly follow the American approach and be dragged into a war between the United States and China over Taiwan. German companies are heavily involved in China, with about a third of businesses importing essential materials from the country.

Ursula von der Leyen, the president of the European Commission, said in a speech in March that “de-risking” relations with China was critical — an important rhetorical difference from the “de-coupling” that was often heard in U.S. policymaking circles.

China sees an opportunity to exploit potential differences between the United States and Europe. Ms. von der Leyen and other European officials will hold a two-day summit beginning today in Beijing, during which they will meet Mr. Xi.

“Beijing hopes that Europe won’t go the same way as the U.S.,” said Yu Jie, a senior fellow on China at Chatham House, a London-based think tank.

American businesses, meanwhile, want greater certainty in the U.S.-China relationship. “Business can’t ignore China because the market is too big, but they question how much geopolitical risk they are willing to take themselves,” Ms. Yu said.

Michael Hart, president of the American Chamber of Commerce in Beijing, says the end of Covid-era travel restrictions that prevented American business leaders and policymakers from having face-to-face meetings has helped.

He acknowledges that there are challenges to operating in China but said he believes many companies, such as direct-to-consumer businesses, inevitably want to tap into a huge market. Mr. Hart also contends that business can act as a counterweight to the political dogmatism that dominates in Washington. “U.S. business will be here and be that ballast,” he said.

Others, however, see that as wishful thinking. Chris Miller, the author of “Chip Wars,” a book on the geopolitical implications of the semiconductor industry, who teaches international affairs at Tufts University, says the root causes of the difficulties for global businesses operating in China are Mr. Xi’s policies. They are deterring long-term foreign investment and reshaping the Chinese economy in ways that alarm international companies.

Mr. Miller points to overproduction by Chinese automakers generating a backlash in Europe and Japan. Last week, the Biden administration announced restrictions that limit how much Chinese companies can benefit from American subsidies for E.V. manufacturing.

Mr. Xi’s dinner with business leaders in San Francisco, Mr. Miller adds, was an example of why doing business in China is harder than ever, rather than a sign of a more welcoming environment from Beijing.

“You can equate the difficulty of doing business there with the number of standing ovations,” he said. “That is not evidence that the business environment is safe, but that market access depends on the whims of the Chinese leadership. Global business can’t ignore the world’s second-largest economy, but that doesn’t mean they are happy or planning to invest more.”

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