The Xi-Biden Summit in San Francisco is a crucial moment for both the United States of America and China, as they try to find a balance in a world that has become increasingly unstable.
The U.S., as well as the rest of the world, must acknowledge that China is a major player in the global relationship, and strive for a reasonable, if not ideal, framework.
The markets are at risk: Apple, Nike and Caterpillar, among others, are heavily dependent on the Chinese market for revenue and growth. China is also the epicenter of manufacturing in the world.
The Asia Pacific Economic Conference will mark a pivotal moment in the complex relationship between China and the United States. This relationship is facing more challenges today than in the last 20 years. Both countries are engaged in a long-term battle for global supremacy. They both aim to influence the rules, standards, and norms of the international system for the foreseeable.
The global community is made up of a wide range of stakeholders including investors, governments, and even small countries.
, is eager to see the major powers exploring opportunities for cooperation on a variety of global issues, such as nuclear weapons control, climate changes, and the
Artificial Intelligence Regulation
It is urgent to ask if these two global giants are able to strike an effective balance between their long term strategic competition and their growing need for relationship management. To address the new existential challenges, they must also rebuild their essential habits of collaboration.
The U.S. has emphasized the importance of this balance.
China has been reluctant
It is important to embrace the concept of competition while maintaining guardrails, and also cooperation when there are shared threats and interests. There are signs that
China is becoming more receptive
The meeting between the two parties did not produce a consensus on this concept.
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It will be crucial to determine whether the two countries are on a path towards an "accommodation", which can set the boundaries required to prevent the competition from escalating and resulting in conflict, while actively searching for avenues of cooperation on urgent global challenges.
The U.S., and the rest of the world must acknowledge that China has a major role to play in determining this relationship's course. It is important to recognize that while the U.S. appears to be the "decider," China has a significant role in determining the dynamics of this relationship. China has a long history of
suspending regular dialogue
This pattern has been evident over the years, especially regarding military-to-military conversations, in which it expresses its displeasure at U.S. action. Over the years, this pattern has become more and more evident.
Recent U.S. actions to protect national security interest
Recently, the U.S. implemented policies that are designed to influence China's behavior and protect our national interests. U.S. espionage is one example.
Cyber-spying in China
Measures to expand and strengthen
Export controls on semiconductors
Executive order on Outbound
The inclusion of Chinese companies in various
Trade and economic target
China has cited lists such as the BIS Entities List to show that the U.S. is focused on containing China’s national power.
The Xi-Biden Meeting on the fringes of the APEC Summit is an ideal opportunity for the U.S. to rekindle a spirit of cooperation and collaboration, reminiscent the framework of cooperation that was developed at the G-20 Summit in Bali the year before.
Following a series summer diplomatic initiatives including Secretary of State
Visit of Antony Blinken to China
Including visits by officials such as Treasury Secretary Janet Yellen and Climate Envoy John Kerry. Chuck Schumer is a well-known China hawk.
Leading a bipartisan delegation in China
The desire to navigate through a relationship that is marked by disagreements about human rights, trade and China's development of military capabilities. California Governor
Gavin Newsom recently visited China
Has expressed optimism regarding possible cooperation on climate changes, at least at a subnational level.
Although diplomatic relations have improved, there are still challenges such as Taiwan and Chinese military
maneuvers near Taiwan's airspace
Support for Russia's invasion in Ukraine
Early statements on the recent war between Israel and Gaza
The fact that the Hamas violence was not mentioned, nor were the hostages. The increased tensions in South China Sea and the low-intensity campaign of pressure on Western companies operating in China continue to cast a shadow on the potential for long-term cooperation.
These complexities highlight the importance of the upcoming Xi Biden summit, and the need for demonstrating that the relationship as a whole can withstand individual actions or competition moves without destabilizing it over specific issues. The intention is to illustrate that the competition-cooperation framework is not an on-off switch based on emotional reactions but a comprehensive approach to managing the bilateral relationship.
Both the U.S.A. and China should strive to demonstrate that they can manage their bilateral relationship in a rational, practical and responsible manner. They also need to showcase their role as responsible and stable global powers. The summit is an opportunity to inject some stability into a world that has become increasingly unstable. Both nations must recognize their common challenges, seek new areas for cooperation, and consider the priorities of investors, allies and companies who demand a nuanced and balanced approach to U.S. China relations.
What is at stake for markets and the economy
Many U.S. companies are eager to maintain a stable bilateral relation, as they believe it will help them mitigate geopolitical risk affecting their China operations. Giants like
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The Chinese market is a major source of revenue for many companies.
To support their growth forecasts
China is more than just a giant consumer market. It's a manufacturing hub, with a cost-effective infrastructure.
This deep-seated reliance, however, makes them vulnerable to the disruptions and uncertainty that can arise in the constantly changing landscape of U.S. China relations. Unobstructed access is crucial to their operational success. Their financial performance and profitability can be affected by any restrictions or encumbrances on their ability conduct business in China.
A positive shift in bilateral relationships could lead to increased market access, and lower regulatory hurdles. This would allow these companies to expand their footprint in China. Brands like Apple and Nike are a good example.
The role of Chinese consumers in the global economy is crucial
A better geopolitical climate not only helps to enhance the perception of foreign brand in China, but it also has the ability to reduce nationalistic sentiments within consumers.
A more intensive dialogue between the U.S.A. and China would also provide clarity on China's political and economic trajectory over time, as well as its willingness to accommodate foreign investors and enterprises without bias. Transparency is essential for corporate decision-making. Ambiguities in these areas can lead to cautious investments and hamper strategic planning.
In a recent opinion piece
Secretary Yellen stressed the importance of directing the new economic dialog towards addressing concerns relating Beijing's unfair practices, non-market tools, and actions affecting U.S. companies operating in China. If China truly wants to attract foreign investment and prevent the exodus from international companies, it must do more than just say that China is open for business. The need for concrete policy actions is urgent, policies which create a business environment that is safe, secure, transparent, predictable, and equitable.
It is time for stronger action.
Intellectual property protection
The reduction of
Equal treatment is given to both domestic and foreign companies.
Stop arbitrary detentions and raids
Foreign firms and their workers are subject to a number of restrictions.
Companies will be able to better navigate the Chinese market if there is a noticeable improvement in U.S. China relations. This will also come with significant policy changes in China. This shift towards stability will not only benefit these companies, but also strengthen the bilateral relationship between both nations. This is a catalyst to mutual economic growth, collaboration and global stability and prosperity.
What is at stake? This summit may be the last chance to stabilize relations, showing domestic audiences and stakeholders in both countries that a manageable, even if not perfect, framework is possible for China-U.S. relationships. Both leaders must seize the opportunity to stabilize the relationship before 2024 and a series destabilizing events, including the Taiwanese and U.S. Presidential elections, make it impossible.
San Francisco offers an opportunity to redefine the narrative of the United States-China relationship, striking a balanced between competition and collaboration and creating a precedent that will help create a more stable and predictable future for the global economy.
Managing director and senior analyst of policy at Longview Global and CNBC contributor