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U.S.-China Rivalry Remains Fluid Despite Positive Commitments at San Francisco Summit

Updated: May 23

On the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco on Nov. 15th, U.S. President Biden and Chinese President Xi met for bilateral talks to find common ground despite increasingly hostile rhetoric between the two nations.

To the casual observer, the meeting looked positive for both leaders. The two sides agreed to reestablish military-to-military communication since tensions flared over a high-altitude balloon originating from China flew across North American airspace in early 2023, including Alaska and western Canada, before being shot down off the coast of South Carolina. A tension further exacerbated by China's proclaimed friendship, as well as economic and weapons support for Russia in its war against Ukraine.

China also committed to work to halt the flow of chemical precursors for fentanyl to the U.S. Chinese manufacturing companies are a source of the drug and precursor chemicals that can be combined. Both leaders then directly navigated one another's concerns over Taiwan, particularly regarding semiconductor issues, U.S. weapons to Taiwan, and rhetoric surrounding global anxiety at the prospect of unintended conflict. The two leaders also secured agreements to collaborate in the development of artificial intelligence to avoid any potential pitfalls concerning global security. Finally, as the two countries have in the past, both leaders committed to continuing cooperation in battling climate change, as China and the U.S. are the world's leading emitters. On a lighter note, President Xi showed a willingness to restart the acclaimed "Panda Diplomacy" and return pandas to the National Zoo in Washington, DC after their recent departure to Beijing.

However, despite the handshakes and smiles, the two nations will remain at odds as both leaders seek to assert an advantage in a geopolitical rivalry that has come to dominate headlines. President Biden will likely veer more hawkish towards China as he seeks to project strength amid the 2024 Presidential campaign. Meanwhile, President Xi will seek to continue China's multi-decade economic boom as a budding economic superpower. Furthermore, President Xi has also expressed, both directly and indirectly, a vision of surpassing the legacies of past leaders Deng Xiaoping and Mao - a vision highlighted in policies towards exponential economic growth and increased direct investment in building China's military. The U.S. and its position as the one true superpower stand in the way of these lofty goals held by China and President Xi.

The past two years have also found the U.S. and China increasingly on separate sides of many areas of global conflict that will continue to strain diplomatic relations and cooperation between the two. After Russia invaded Ukraine, the U.S. rallied Western nations and NATO against Russia in support of Ukraine's effort to defeat its cultural cousin to the East. This support from the West has resulted in the severe economic sanctioning of Russia's finance and energy markets. Russia has been able to weather this economic strain in part thanks to an alliance of convenience with China. An alliance that also includes Iran and North Korea, who, alongside China, have provided an array of weapons and battlefield drones for Russia in its war in Ukraine. At every turn, the U.S. and China have found themselves on opposing sides, as China's vision for the world's future is a direct challenge to that of the U.S. and the West.

However, there is one key area in which the U.S. will likely continue to deploy leverage over China: foreign direct investment. In the post-Covid era, China has struggled to maintain its level of economic growth due to President Xi's strict policies over Western foreign direct investment into China. Multiple companies from an array of sectors have thought twice about investing in China due to increased regulations, strict oversight by the Chinese government, and perceived unfair contracts and agreements, which has led Western investors to worry about threats to intellectual property. This, in turn, has stagnated key areas of China's economy and, therefore, has been an area of frustration for President Xi. This was reflected in a high-profile dinner attended by President Xi in San Francisco the day after his meeting with President Biden. In a speech littered with goodwill and a softer tone, President Xi addressed the titans of Western industry in expressing that China was ready to be a "partner and friend" to the U.S., words aimed at a business community alarmed by China's crackdown on various industries and the use of exit bans and detentions against some executives. These remarks from President Xi come at a time when the U.S. administration has tightened the screws on China's economy through investment restrictions, particularly concerning export controls.

The U.S.-China relationship exemplifies Thucydides' Trap, defined as a deadly pattern of structural stress that results when a rising power challenges a ruling one. As the rivalry between the two economic and geopolitical superpowers continues its dark march forward, the delicate chess match at play between the two nations will decide a future that is one of global cooperation and innovation between two profoundly different nations or a mirage of goodwill with only one inevitable outcome: war.

Image: The White House

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