US, China seek to stabilise ties with Biden-Xi summit

Bloomberg

US President Joe Biden and Chinese leader Xi Jinping have plenty to discuss during their first virtual summit — from sanctions to Taiwan — even as expectations for a breakthrough on major issues are low.
A Biden administration official said the US expects the virtual summit in Washington to last several hours, a time frame that includes translation for both leaders in their third conversation this year. It comes as the world’s two biggest economies spar regularly over the origin of Covid-19, human rights in Hong Kong and Xinjiang, and the status of Taiwan.
While those issues aren’t going to be resolved in the meeting, the US says it wants to put “guardrails” on the relationship so it doesn’t get worse. The US official told reporters that Biden will press Xi to abide by established international norms.
A joint announcement on climate change shows the two sides can cooperate on some issues. Chinese Foreign Ministry spokesman Zhao Lijian said on Monday that relations are at a “critical crossroads” and Beijing hopes they will return “to the right track of healthy and steady development.”
Xi comes to the summit in a strong position, having cleared a major hurdle last week to securing a third term as Communist Party chief next year. And while Biden won passage of a key infrastructure bill, Democratic infighting and accelerating inflation have hammered his public support a year before midterm elections.
The US has sanctioned Chinese officials and goods over Beijing’s treatment of Uyghur Muslims in Xinjiang and
its imposition of a national security law in Hong Kong, drawing reprisals from China.
Beijing also penalised US officials who “acted egregiously” with regard to Taiwan and American companies for selling weapons to the self-governed island.

For markets, any signs that bilateral ties are improving may support investor sentiment. But the effect could be limited given wider concerns over a global surge in inflation and the ongoing impact of Xi’s “common prosperity” drive to tackle inequality.
With that backdrop, here’s what the two leaders may choose to focus on:
The US and China are still far apart on economic and trade questions.
While an interim trade deal signed last year remains in force, the two sides dispute whether China is complying. The accord called for Beijing to make changes to regulations on intellectual property and other areas, and had specific targets for Chinese purchases of US goods.
Bloomberg calculations show that in the first 21 months of the two-year deal, China has only bought half of the goods it promised to purchase. Yet Chinese exports continue to rise, hitting a new annual record in the first 10 months of this year.
The US has also been flagging other concerns, including the impact of China’s “extremely robust and very effective industrial policies on our ability to grow, on our ability to compete, on our ability to thrive,” US Trade Representative Katherine Tai said last week. “That is a larger conversation that we feel very strongly that we have to have.”
Tai is in Asia this week with Commerce Secretary Gina Raimondo, meeting officials in India, Japan, and South Korea. Biden and Xi could give the go-ahead for them to meet with their Chinese counterparts now or in the near future.
China has long refused to allow American regulators to examine audits of firms whose shares trade on US exchanges, citing national security concerns. American lawmakers say such resistance risks exposing investors to fraud, and the US has taken initial steps toward potentially delisting some Chinese stocks.
But Beijing has more recently signaled it’s willing to boost cross-border accounting cooperation. China’s securities regulator provided a proposal to the US last summer on resolving the audit impasse. And China has slowly begun opening up its financial industry to overseas players.
JPMorgan Chase & Co. in August became the first Wall Street firm to get approval to take full ownership of a securities venture in China, just ahead of Goldman Sachs Group Inc. However, many US companies including Visa Inc. and Moody’s Corp. continue to wait on the sidelines for approval. A positive outcome at the summit could benefit those firms.