The Biden-Xi meeting after effects
And what we might see next
Two weeks have passed since the meeting, and the general feeling is both sides got what they wanted with the meeting. It lessened the tension in the relationship and US officials, especially President Biden, were able to directly communicate and discuss issues with President Xi.
From the US perspective, they were able to get agreement on:
1: Military-military communication lines reopened.
2: Fentanyl working group agreement.
3: A direct line of communication to Chairman Xi Jinping.
4: AI working group to ban usage in military applications.
Fentanyl is a serious political issue in the US and the Biden Administration must show that it is trying to resolve the problem. There is a trust but verify approach to this collaboration.
From China’s perspective, they:
1: Received reassurance on the One-China policy.
2: Wanted alone time between the two leaders (the walk in the park).
3: China projects that it can manage a peaceful relationship with the US.
4: Open dialogues with commitments to taking action.
Overview: The tension and nature of the relationship are not expected to change much at this time. The negative tone in the relationship has calmed down, and with both sides talking, the opportunity for serious deterioration is now less than it was two weeks ago.
Does this change the tariff situation or export controls?
Tariffs
USTR needed to review and publish the results of the review of the Section 301, and other tariffs, four years after they were implemented, which was in 2018. The review is not expected to be released in the near future, if ever. The assumption is that tariffs cannot be relaxed, or removed, as it is politically untenable, and would be handing a win to the Republicans, even though it would be good for companies and consumers.
Export Controls
Export controls will not be relaxed, and more controls are expected to be rolled out, especially aimed at machinery, buying semiconductor chips through third parties/ third countries, supply of technology, parts, etc. More restrictions are also expected on AI, semiconductors, and quantum computing.
The meeting did go over major issues of concern, but did not resolve challenges:
1: No change in tariffs..
2: Due to US national security concerns, there is no change in technology restrictions
It is expected that China will:
1: Not change the country’s industrial policy.
2: Still a friend to Russia and will continue to provide non-military support and take advantage of resources and sales to Russian firms.
3: Will likely not change policies regarding foreign business complaints or national security laws.
There is the recognition that neither side wants to show they gave the other side anything.
What should we see after the meetings, what’s next?
We should see the effects of the meeting in the next few weeks/months. There are several smaller areas that could see some agreement. These are:
1: Some form of climate agreement/cooperation
2: Announcement of additional flights between both countries
3: Purchases of Boeing airplanes
4: More visits by officials
5: Pandas returning to the US
6: More US students to China
7: Updated Chinese visa policies
Overall assessment is that none of these is a breakthrough, but if the agreed points are followed through, it will be seen as progress and lessening of tensions between both countries. This is important heading into the 2024 elections.