Decoding Biden-Xi summit: Symbolism, struggles and shifting dynamics

In the backdrop of a highly anticipated bilateral meeting between Xi Jinping and Joe Biden, the dynamics of US-China relations remained largely unchanged, characterised by a blend of diplomatic caution and underlying tensions. This complex relationship could be symbolically captured at the moment when US Secretary of State Antony Blinken visibly winced during Biden’s post-meeting press conference. Biden’s labelling of Xi as a “dictator” in this context not only reflected a frank, albeit controversial, acknowledgement of China’s different governance style but also inadvertently echoed broader concerns about China’s perceived expansionist attitudes. This incident, occurring amidst the APEC summit where the leaders met for the first time in a year, symbolises the ongoing struggle to balance diplomatic engagement with the stark realities of geopolitical rivalry, where even a single word can unsettle months of diplomatic effort.

Amid the backdrop of escalating tensions between the US and China over trade disputes, intellectual property rights and geopolitical conflicts, China’s economic landscape is experiencing significant shifts. Recent evidence points to a pronounced deceleration in China’s economic momentum, which for years appeared insulated from the cyclical fluctuations affecting other global economies. Analysts suggest that structural factors such as mounting debt and demographic challenges are beginning to exert pressure on China’s financial stability.

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Additionally, the real estate sector, a critical pillar of China’s domestic financial system, is showing signs of strain, with significant players like Country Garden grappling with downturns. Country Garden is the largest non-state-owned developer in China by sales. has been the largest non-state-owned developer in China by sales. It has also  defaulted on a US dollar bond recently. The consequences of such financial distress have rippled through the economy, resulting in decreased household wealth and lowered consumer spending, which in turn exacerbates the economic challenges that China is dealing with.

Further, Nomura’s  analysis presents a striking picture: approximately 20 million pre-sold homes are stuck in development limbo. This staggering figure is twentyfold larger than the backlog of projects from Country Garden at the close of 2022. Nomura  warns of a looming social challenge as delayed home deliveries could escalate into a broader societal concern, potentially destabilizing social harmony. It’s anticipated that Beijing might have to intensify its policy interventions significantly in response to this growing issue. Concurrently, the conflict in Ukraine has intensified the financial outflow from China, with investors withdrawing funds on a scale deemed “unprecedented” since the onset of the war. This capital flight adds another layer of complexity to the economic challenges confronting China.

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The International Monetary Fund  points out that China’s economic expansion will likely moderate in the coming years due to demographic shifts towards an older population and a deceleration in productivity gains. Furthermore, the potential for geoeconomic splintering presents additional risks that could influence growth trajectories across Asia and further afield. In a less favourable outcome where trends towards reducing reliance on China through “de-risking” and “re-shoring” become prevalent, the most China-integrated Asian economies could see a reduction in output by as much as 10 per cent over a five-year span.

The recent dialogues between the United States and China occur amidst complex dynamics, as  reported by The Washington Post. The Chinese representatives proposed a meeting between Xi and Biden, with Xi expressing a desire to have a formal dinner with American corporate executives. Despite this gesture, during the actual dinner, Xi refrained from discussing topics of trade and investment. Consequently, American businesses received no assurances or clarity on the challenging commercial climate they face in China.

Economically, while Xi’s rhetoric at the APEC CEO summit extended a welcoming hand to global businesses, promising to address concerns such as intellectual property rights and data security, the banquet with US business leaders lacked substantive discussions on trade and investment. This omission left the American business community without clear reassurances or strategies to navigate China’s complex market environment. The US business sector’s expectations for tangible policy shifts or deeper engagement on these pressing issues remained unmet.

The talks between Biden and Xi culminated in a handful of accords, addressing the flow of fentanyl into the United States, re-establishing military dialogues, and touching upon cooperation in the field of artificial intelligence. These were largely outcomes sought by the US, and while they signal a willingness to engage, the agreements represent carefully measured steps rather than wholesale changes in policy or approach from either side.

In the realm of military and security, the agreement to resume military dialogues, although presented as a success by Biden, appeared to be more of a procedural reinstatement than a strategic detente. There is scepticism about the potential for these dialogues to meaningfully alter the Chinese military posture or behaviours that the US deems provocative. Hence, the renewal of these communications channels, while a step towards reducing risks of miscalculation, does not suggest a significant shift in the broader strategic tensions between the two powers.

Furthermore, Xi’s public commitment to peaceful coexistence and partnership with the United States, and the respectful reception he received, were leveraged for domestic consumption within China, to portray Xi as adeptly managing China’s paramount international relationship. Nevertheless, this narrative did little to mask the underlying strategic and ideological divergences. Xi’s emphasis on viewing US-China relations against the backdrop of a transforming global order hints at a persistent, fundamental discord in how both powers envision the international system’s future. It underscores the enduring complexity of US-China relations, where strategic rivalry will exist for decades.

The author is Officer on Special Duty, Research, Economic Advisory Council to the Prime Minister of India. Tweets @adityasinha004. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.

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