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U.S. President Joe Biden finally got around to speaking with his Chinese counterpart Xi Jinping. The two leaders conversed by phone late Wednesday Washington time, early Thursday in Beijing. The call came on the eve of China’s Lunar New Year holiday, three weeks after Biden was sworn in as president, and after he had already spoken to dozens of other heads of state.
Biden, according to a White House readout of the call, stuck to the China policy script his aides have been telegraphing since his election: he “underscored his fundamental concerns about Beijing’s coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan.”
Xi, for his part, stressed that confrontation between the two nations would be a “disaster” and called for a resumption of dialogue. But he stood firm on topics China considers matters of national sovereignty. “The issues of Taiwan, Hong Kong and Xinjiang are internal affairs of China, and concern China’s sovereignty and territorial integrity,” he said, according to a report in the state-run Xinhua news agency. “The U.S. side should respect China’s core interests and act with caution.”
In tone and style, Biden’s careful communications with the Chinese leader were a stark departure from the freewheeling bombast of Donald Trump, who, as the pandemic accelerated, declared he had no interest in speaking to Xi. But that is small comfort to Beijing.
Biden has left in place Trump tariffs on more than $350 billion Chinese exports to the U.S., and declined to release scores of Chinese companies from blacklists prohibiting them from purchasing semiconductors and other key components made with advanced American technologies. In his first foreign policy address last Thursday, Biden called China America’s “most serious competitor.”
And in recent days the new president has signaled he intends to move more aggressively and systematically than his predecessor in countering China’s global influence. Biden has directed aides to begin a broad review of national security policies related to China. He has vowed to mend frayed relations with key U.S. allies to increase pressure on Beijing. On Wednesday, in his first visit to the Pentagon as commander in chief—and hours before his call with Xi—Biden announced the formation of a Defense Department task force to craft a comprehensive policy for dealing with China.
In their call, both leaders acknowledged the need for the world’s two largest economies to cooperate if they are to find meaningful solutions to shared problems like climate change and the COVID-19 pandemic. Xi cited potential gains from greater collaboration in economics, finance, law enforcement and military affairs. “When China and the United States cooperate, both sides gain, and when they fight, both are harmed,” he said.
In the Year of the Ox, both leaders will struggle to balance confrontation and cooperation. But, for now at least, they’re talking.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Coup protests
Protests against the military coup in Myanmar appear to be growing by the day, as hundreds of thousands are taking to the streets in opposition to the jailing of democratically elected President Aung San Suu Kyi and the military’s takeover of the government. In response, the military is taking an increasingly hard line, announcing a national curfew this week and deploying tear gas, water cannons, and even live ammunition to quash the protests. New York Times
No more tweets
On Wednesday, the Twitter blocked hundreds of accounts in India, relenting to government demands to silence some voices in ongoing farmer protests. India accused the accounts of spreading misinformation and said they could spark violence, while Twitter said it would continue to lobby for the right to free expression and said the accounts would still be accessible outside of the country. Fortune
Bounced from the club
Clubhouse, Silicon Valley’s hottest new audio-chatroom startup, briefly connected users in China with the rest of the world last week, giving people in China the chance to talk in open forums about sensitive topics like human rights issues in Xinjiang and the 2019 Hong Kong protests. On Monday, Chinese regulators banned Clubhouse and now dozens of platforms in China are attempting to replicate Clubhouse’s audio-only formula under China’s closed-off Internet guidelines. Fortune
The WHO investigates
The World Health Organization’s landmark investigation into the origins of the pandemic concluded in Wuhan this week, and investigators said the virus most likely spread to humans from bats through an intermediary host. Investigators shot down the theory that COVID-19 had been manufactured in a lab, but provided Beijing with a win in promoting the unlikely notion that the virus may have originated elsewhere and was transported into China via frozen food packaging. Fortune
Embezzled
Amid a $10 billion embezzlement scandal, HNA Group’s leadership is in disarray and lenders are knocking at the company’s doorstep in what's becoming China’s largest corporate collapse in recent history. As recently as 2017, the Chinese conglomerate was on a spending spree, purchasing large stakes in global brand names like Hilton, Deutsche Bank, and Virgin Australia. But now Beijing is cracking down, signaling that it is willing to take a stand in reigning in the power and excesses of even the most well-connected firms. New York Times
Coronavirus by country
Thailand has largely contained COVID-19, but its economy has been decimated due to the lack of international tourists. Currently, Thailand’s doors are technically open to tourists, but the country requires visitors to serve 14-day hotel quarantines before entering the country. This week, Thai officials dismissed the idea that vaccinated visitors could be exempt from quarantine, saying that there’s not enough evidence that people cannot spread the virus after getting injected. Vaccine passports may provide the quickest route to jumpstarting international travel, but the concept isn’t taking off in Asia just yet. Bangkok Post
Markets and movers
Volkswagon – The German automaker believes it can fly. On Tuesday, Volkswagon announced that it is conducting a feasibility study for flying cars, or what it calls “vertical mobility,” in the Chinese market. Reuters
Tokyo 2020 – Yoshiro Mori, the head of Japan’s 2020 Olympic organizing committee, said Thursday that he will resign from his position amid fallout for his sexist comments last week. The committee has also extended an offer to Saburo Kawabuchi, the former chairman of the Japan Football Association, to serve as his replacement. Nikkei Asian Review
Hong Kong Stock Exchange – On Tuesday, HKEX appointed JP Morgan’s Nicolas Aguzin as chief executive. Aguzin is set to start on May 24 and will replace the exchange’s long-time head Charles Li. Fortune
Tencent – Zhang Feng, a top executive at the Chinese tech giant, is being held by government authorities for his role in allegedly turning over user data to former public security official Sun Lijun without authorization. Sun is currently under investigation by the central government for undisclosed violations of Communist Party rules. Wall Street Journal
Cansino – Pakistan said this week that the Chinese vaccine maker’s one-shot COVID-19 vaccine was 65% effective in a multi-country analysis of its phase III clinical trials. On Wednesday, Mexico became the first country to approve the vaccine and will begin doling it out to emergency-use population groups. Fortune
Renasas – The Japanese auto chipmaker is buying the U.K.-based chip designer Dialog for $6 billion. Dialog specializes in low power chips used in Bluetooth products like earphones and fitness trackers. Deal Street Asia
Match Group Inc – The dating app giant and parent of apps like Tinder and Hinge is buying Korean social media firm Hyperconnect for $1.73 billion as Match Group Inc plans to grow in Asia and expand beyond romantic offerings. Deal Street Asia
Final figure
-5.6%
Malaysia’s economy shrank by 5.6% in 2020, the country’s worst economic performance since the 1998 Asian Financial Crisis when it contracted by 7.4%. The -5.6% rate is worse than the government’s 2020 GDP projections of between -3.5% to -5.5% growth, but the central bank is confident that the worst of the crisis is over. Malaysia is now gradually reopening its economy after months of lockdowns and plans to begin rolling out vaccines at the end of February. Nikkei Asian Review