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Joe Biden drops early clues about his Asia agenda

December 3, 2020, 11:33 AM UTC
Democratic presidential candidate and former U.S. Vice President Joe Biden delivers remarks about White Nationalism during a campaign press conference on August 7, 2019 in Burlington, Iowa.
Tom Brenner—Getty Images

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A Nov. 8 tweet from former Australian Prime Minister Malcolm Turnbull captured the sentiment of many Asian political leaders to news that Joe Biden had defeated Donald Trump in the U.S. presidential election:

“Congratulations Joe Biden and Kamala Harris! What a relief that you won!”

In a later appearance on Australian TV, Turnbill elaborated: “It’s a relief to have a return to normal transmission, to have an administration that is going to be consistent, that isn’t going to be making decisions by wild tweets in the early hours of the morning, that isn’t going to be walking out of global treaties and alliances, discombobulating friends and foes alike.”

Turnbill, of course, has some first-hand experience with getting discombobulated: his first official phone call with Trump in 2016 was a diplomatic disaster. But Turnbill’s successor, Scott Morrison, who has often boasted of his special rapport with Trump, seemed no less elated by Biden’s victory.

Australia wishes you every success in office,” Morrison gushed in a tweet. In a subsequent statement, Morisson hailed Biden as a “great friend of Australia,” praised his “commitment to multilateral institutions,” and promised to invite the new president to Australia to celebrate the 70th anniversary of the military treaty between Australia, New Zealand, and the United States.

The leaders of Japan’s ruling Liberal Democratic Party, too, have touted their affinity for Trump; former Prime Minister Shinzo Abe was the first foreign leader Trump invited to the White House, and the two men bonded over golf.

And yet Abe’s successor, Yoshihide Suga, emerged all smiles from his congratulatory phone call with the president-elect. In their 15-minute exchange, Suga told the Japanese press, Biden had made a point of declaring that the U.S.-Japan security alliance applies to a disputed rock outcropping in the East China Sea, which Japan controls and calls the Senkaku Islands but China also claims as the Diaoyu Islands.

Biden’s calls with South Korean President Moon Jae-in and Indian Prime Minister Narendra Modi were no less cordial. Moon worked closely with Trump to arrange an unprecedented 2018 summit to discuss denuclearization. Those talks produced a publicity storm but not much else, and eventually collapsed. Biden told Moon that, unlike Trump, he won’t meet with Kim without preconditions, but assured him that South Korea is a “lynchpin of the security and prosperity of the Indo-Pacific region,” according to Moon’s spokesman.

Modi, who all-but campaigned for Trump during the election, extolled Biden’s victory as a “testament to the strength and resilience of democratic traditions in the United States,” according to an Indian foreign ministry readout of the call. The two leaders discussed “shared priorities” including climate change and “cooperation in the Indo-Pacific region.”

The nuances of those exchanges with America’s key Asian allies offer early clues to how Biden’s approach to managing relations in the region will differ from that of his predecessor—and how it won’t.

Biden and his advisors have stressed that what won’t change is the recognition that China has emerged as America’s primary strategic competitor, and that four decades of economic “engagement” have failed to transform China into a liberal democracy as many U.S. foreign policy experts had previously hoped.

Biden’s choices to lead his foreign policy team—including Anthony Blinken as secretary of state, Jake Sullivan as national security adviser, and other policy advisers such as Michele Flournoy, Ely Ratner, and Kurt Campbell—have staked out hardline policy positions on China.

In a new interview with New York Times columnist Thomas Friedman, Biden said he won’t move immediately to lift the 25% tariffs Trump imposed on $250 billion worth of Chinese goods and components used by U.S. manufacturers, nor would he scrap Trump’s “phase one” trade agreement requiring China to purchase about $200 billion in additional U.S. goods and services in 2020 and 2021.

“I’m not going to make any immediate moves, and the same applies to tariffs,” Biden told Friedman. “I’m not going to prejudice my options.”

Blinken has vowed that the Biden administration will “fully enforce” the Hong Kong Human Rights and Democracy Act, which places sanctions on officials, financial institutions, companies and individuals deemed to have undermined the territory’s autonomy. It seems equally unlikely that Biden will loosen the restrictions Trump has placed on the sale of U.S. chip-manufacturing technologies to Chinese companies including Huawei Technologies.

Biden said he intends to crack down on China’s “abusive practices” like “stealing intellectual property, dumping products, illegal subsidies to corporations” and forcing technology transfers from American companies to Chinese partners.

But he stressed the need for “good old American industrial policy” to bolster investment in research and development, infrastructure, and education at home, while strengthening ties with American allies abroad.

“The best China strategy, I think, is one which gets every one of our —or at least what used to be our—allies on the same page,” he said.

Whether Chinese President Xi Jinping shares Malcolm Turnbill’s sense of relief about the election’s outcome is anyone’s guess. Beijing offered its congratulations to Biden on Nov. 13, becoming one of the last major powers to do so. “We respect the American people’s choice,” said Chinese foreign ministry spokesman Wang Wenbin. “We congratulate Mr. Biden and Ms. Harris.”

In just a few minutes, please feel free to join us for “On the Road Again,” a virtual conversation to ponder “The Future of Post-Pandemic Travel.” Grady and I will talk with special guests Trip.com CEO Jane Sun, Singapore Tourism Board Chief Executive Keith Tan, Group President for Marriott International Craig S. Smith, and McKinsey & Co. Partner Steve Saxon. Our conversation will take place today at 9 P.M. Beijing time (8 A.M. New York). You can join the livestream here.

More Eastworld news below.

Clay Chandler
clay.chandler@fortune.com

This edition of Eastworld was curated and produced by Grady McGregor and Naomi Xu Elegant. Reach Grady at grady.mcgregor@fortune.com and Naomi at naomi.elegant@fortune.com.

Eastworld news

Asia tsar

President-elect Joe Biden is considering appointing the White House's first-ever Asia tsar to serve on the National Security Council, according to the Financial Times. The move signals Asia's increased importance to the U.S., and also that Biden is preparing to deal with a set of complex challenges related to China. A new Asia tsar may be tasked with helping guide the administration through issues like the U.S.-China trade war, pressuring China on human rights concerns, and rebuilding U.S. alliances in the region. Financial Times

The Wuhan files

Leaked internal documents from the Hubei Provincial Center for Disease Control and Prevention reveal discrepancies in case numbers and early missteps in the handling of the coronavirus outbreak by health authorities in Hubei, the Chinese province where the coronavirus was first detected. The documents span from October 2019 to April 2020. They reveal that Hubei officials underreported case numbers and deaths in February and March and that early efforts at detecting COVID-19 were hampered by unreliable test kits. CNN obtained the files from an anonymous whistleblower who worked in the Chinese healthcare system. CNN

Friends on Wall Street

U.S.-China relations are at their lowest point in decades, with the two countries embroiled in disputes around trade, technology, human rights, and the COVID-19 pandemic. But one American institution has retained a friendly—and growing—relationship with China: Wall Street. In 2018, Beijing reached out to high-level banking executives with ties to the Trump administration for help in trade negotiations with the U.S., in exchange for more access to China’s financial markets. Wall Street firms like BlackRock are eager to access China, the fastest-growing market for financial services in the world, especially at a time when the U.S. market is saturated. The trade pact that the U.S. and China signed in January included significant provisions to open up China’s financial markets. Wall Street Journal 

Wine wars

The political and trade disputes between Australia and China intensified this week, with an international alliance of lawmakers urging their country’s citizens to buy Australian wine as a signal of support for Australia’s wine industry, which China has battered with tariffs of up to 212%. Wine is just one of several Australian exports that China has targeted with tariffs in recent weeks. Politicians and economists in Australia view the actions as retaliation for Canberra’s push for an investigation into China’s early handling of the coronavirus outbreak. Australia is planning to file a complaint to the World Trade Organization over China’s tariffs on Australian barley. Wall Street Journal

Activists in jail

On Wednesday, three prominent pro-democracy activists in Hong Kong received jail sentences for their participation in an unauthorized protest outside the city’s police headquarters in June 2019. Joshua Wong, the most famous of the three, received a 13.5-month sentence. Ivan Lam, who co-founded the now-defunct student activist group Scholarism with Wong, was sentenced to 10 months. Agnes Chow, who has built a stronghold of support in Japan for Hong Kong’s pro-democracy movement, received a seven-month jail term. On Thursday, Hong Kong authorities also charged pro-democracy activist and media mogul Jimmy Lai with fraud, in what he called "trumped-up" charges aimed at silencing his criticisms of Beijing's crackdowns in Hong Kong. The Atlantic

A farming revolt

New agricultural reform laws in India have sparked an ongoing protest in the capital of New Delhi, where over 300,000 farmers have blocked roads and highways into and around the city for days to demand the government repeals the three laws. India’s government says the laws, which deregulate large parts of India’s agricultural industry, including crop pricing, will modernize the industry and provide farmers with more autonomy and prosperity. Opponents argue that the legislation favors large corporations and will end the minimum pricing guarantees that benefit farmers. Vox

Coronavirus by Special Administrative Region

Hong Kong’s fourth wave of infections is now spinning out of control stemming from what has become known as the ‘dance cluster.’ Officials have traced the outbreak, which has grown to over 1,000 new COVID-19 cases in the past week, to dance clubs that cater to Hong Kong’s middle-aged, elite women, who learn salsa, ballroom, and other dance moves from younger male instructors. City residents had spent the previous months living relatively free of COVID-19, but the new wave of infections has prompted officials to tighten social distancing measures, urge people to work from home, close some bars and entertainment venues—dance clubs included—and postpone the city’s planned travel bubble with Singapore. Washington Post

Markets and movers

Gojek and Grab Southeast Asia’s two most valuable ride-hailing start-ups are reportedly close to finalizing details on a potential merger, according to Bloomberg. Investors have been pushing the two firms to combine forces in order to reduce cash burn and create a powerful regional tech giant. Bloomberg

AutoX The Alibaba-backed autonomous vehicle start-up said on Thursday that it has begun fully driverless testing in China with Fiat Chrysler’s Pacifica minivans. AutoX will have a fleet of 25 driverless vehicles in Shenzhen and other cities to test the technology. Reuters

JD Health The healthcare arm of Chinese e-commerce giant JD.com is expected to raise $3.5 billion in its IPO on the Hong Kong stock exchange on Dec. 8. The debut will be Hong Kong’s largest IPO of the year. Reuters

Evergrande  Evergrande Property Services, a unit of China Evergrande Group, China’s second-largest—and most indebted—property developer, raised $1.8 billion in its debut on the Hong Kong stock exchange on Wednesday. Investors, however, had a lukewarm response to the subsidiary, which fell as much as 3% during the day, before closing down 0.2%. Shares in Hong Kong-listed parent China Evergrande fell 2.5% on the same day. CNBC

Paytm Chinese fintech giant Alipay is considering selling off its stake in the Indian digital payments processor Paytm amid rising tensions between China and India, sources told Reuters. Alipay owns a 30% stake in Paytm, India’s largest unicorn valued at roughly $16 billion. Reuters

Final figure

$2.2 trillion

On Wednesday, the White House said it expects to sign a bill passed by Congress that could delist U.S.-traded Chinese companies from American exchanges or prevent them from listing in the U.S. in the first place. The bill threatens a significant chunk of the U.S. stock market, which includes listings from Chinese tech giants like Alibaba and JD.com. This year, Chinese companies have raised $12 billion in U.S. IPOs. In total, over 210 Chinese firms have a combined $2.2 trillion market capitalization on American exchanges. South China Morning Post