In Biden-Xi meeting, China dangles a big carrot in front of U.S. business
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Maybe the best way to describe Monday’s virtual meeting between U.S. President Joe Biden and Chinese President Xi Jinping is with a version of Oscar Wilde’s old quip about talking dogs: the remarkable thing isn’t so much what they said but that they spoke at all.
The two leaders conversed for more than three hours, according to the White House, touching upon a wide range of issues including trade, climate change, Taiwan, North Korea and Afghanistan. The exchange appears not to have produced any significant new policy breakthroughs. But, by all accounts, the tone was amicable. At the very least, leaders of the world’s two largest economies demonstrated they could communicate directly with each other in a respectful, even cordial manner.
Biden told Xi he hoped to “establish some common-sense guardrails, to be clear and honest where we disagree, and work together where our interests intersect, especially on vital global issues like climate change.” Xi called Biden an “old friend,” and declared himself “ready to work with you, Mr. President, to build consensus, take active steps and move China-U.S. relationships forward in a positive direction.”
Taiwan was the prickliest topic on the agenda, and possibly the main reason Biden suggested the meeting. White House officials said Biden “underscored that the United States remains committed to the ‘one China’ policy,” while emphasizing that the U.S. “strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait.” China’s state-owned media highlighted that Biden had reassured Xi that the U.S. does “not support ‘Taiwan independence.'”
Biden’s language on Taiwan appears meant to affirm the U.S. government’s long-standing policy of “strategic ambiguity” when it comes to defending the island, which Beijing considers a renegade province. Biden has created confusion about America’s Taiwan policy at least twice this year with comments suggesting that he stands ready to defend the island in the event of a mainland invasion. That formulation is more forward than the traditional U.S. policy line, which is to refrain from saying one way or the other whether the U.S. would use force to defend Taiwan from an invasion.
Beijing has ramped up tensions in the Taiwan Strait and South China Sea in recent months. During a single day in October, the People’s Liberation Army sent a record 149 military aircraft southwest of Taiwan in strike group formations. Taiwan’s defense minister has warned that cross-strait relations are at their worst in 40 years.
China’s official Xinhua News Agency reported that, in their virtual exchange, Xi told Biden that rising tensions in the Taiwan Strait were the fault of island authorities who were attempting to “rely on the U.S. to seek independence.”
The virtual talks were an effort to build on the goodwill created in Glasgow last week by a surprise joint statement pledging that the two nations would work together in the fight against climate change.
Ahead of the Monday meeting, U.S. officials stressed that they weren’t looking for specific outcomes from the encounter, even to the point that they discouraged journalists from calling it a “summit.”
Even so, a readout of the meeting by Xinhua dangles the hint of a Chinese carrot. The report noted that China “takes seriously the wishes of the U.S. business community to travel to China more easily” and has agreed to “upgrade fast-track arrangements” for U.S. executives entering the country. Details of that upgrade remain unclear.
More Eastworld news below.
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at email@example.com.
Tennis vs. China
On Sunday, the Women’s Tennis Association (WTA) issued a statement in support for former Chinese tennis star Peng Shuai and called for an investigation into Peng’s allegations that she was sexually assaulted by Zhang Gaoli, a retired official who once held one of the most powerful posts in the Chinese government. Steve Simon, the WTA’s chief executive, said the tennis association is willing to sacrifice its lucrative business in China should authorities not conduct a transparent and thorough investigation. We are prepared to “not operate our business in China if that’s what it came to,” Simon said. New York Times
Beijing's new bourse
On Monday, the new Beijing Stock Exchange opened for business, a bourse that aims to shore up support for homegrown small- and medium-size enterprises. In total, 81 new companies began trading in Beijing on Monday, with most of them transferring listings from the National Equities Exchange and Quotations, China’s over-the-counter exchange. But analysts say the bourse may cannibalize other exchanges in a saturated market and is unlikely to boost fundraising for Chinese firms. Fortune
Hong Kong's new museum
On Friday, the M+ contemporary art museum opened in Hong Kong in what officials claimed would become Asia's equivalent to the U.S.'s Museum of Modern Art or France's Centre Pompidou. But the museum faces a more restrictive political environment than when it was conceived years ago. Hong Kong adopted a National Security Law in 2020 that artists say restricts artistic expression in the city. Museum officials say the law did not change their curatorial decisions, but have also vowed to comply with Hong Kong's laws. “The opening of M+ does not mean that artistic expression is above the law... It is not,” Henry Tang, chairman of the West Kowloon Cultural District Authority, said at media preview event last Thursday. Fortune
China’s strict "COVID zero" policies are under scrutiny after a video went viral showing medical workers in hazmat suits beating a corgi dog to death in an apartment in Shangrao, a city in southeastern China. The pet’s owner claims that the workers were ordered to euthanize the dog while she was sent to a centralized quarantine because a case of COVID-19 was discovered in her apartment complex. The incident incited outrage on Chinese social media, with users complaining about China’s harsh measures to quell the smallest of outbreaks. State-run outlets, meanwhile, said China should continue its COVID zero path while better protecting the rights of pet owners. Wall Street Journal
Markets and movers
Disney+ – The streaming service from entertainment giant Disney launched in South Korea, Taiwan, and Hong Kong in the last week in hopes that growth in Asia can help offset slowing subscriber growth in places like the U.S. Disney+ has amassed 118 million subscribers since launching two years ago, but will need to grow outside of the U.S. to reach its goal of signing up 230 million to 260 million subscribers by 2024.
Evergrande – Xu Jiayin, chairman of property giant Evergrande, is scrambling to offload personal assets like artwork, calligraphy, and two mansions to help Evergrande meet debt obligations as his firm teeters on the brink of default. But Xu’s personal fortune—estimated at $11.3 billion—makes up only a fraction of the $300 billion in debt obligations Evergrande has built up.
China property – China’s attempt to rein its speculative housing sector is taking a toll on its property market. Chinese home prices dropped 0.2% in October from September, with home prices slumping in 64 of China’s 70 major cities. New construction, meanwhile, plunged 33.1% in October from one year ago.
Retail sales – Amid a property slowdown and fresh COVID-19 outbreaks, China’s economy is showing some signs of resilience. China’s retail sales grew 4.9% in October from last year, beating expectations of 3.5% growth. Industrial output also beat estimates of 3% growth, rising 3.5% in October from one year ago.
Temasek – The Singaporean state investor sold off stakes in Chinese education and technology stocks and while reducing stakes in Chinese tech giants Alibaba and Didi, according to an SEC report filed on Monday. Temasek is also holding off on making new investments into Chinese technology companies due to uncertainty regarding Beijing’s tech crackdown.
Dimon – J.P. Morgan CEO Jamie Dimon skipped Hong Kong’s rigid three-week quarantine for a 32-hour visit to the city, making him one of few people—including actress Nicole Kidman—granted such a quarantine exemption from the Hong Kong government. The city’s leader Carrie Lam said Tuesday that Dimon was given preferential treatment because J.P. Morgan is a “very huge bank.”
HKEX – Mainland Chinese firms seeking to list in Hong Kong may be required to undergo a cybersecurity review by China's cyberspace watchdog before going public, according to new draft rules issued by China's government. The rules may reduce the Hong Kong bourse's competitive advantage since China issued similar rules requiring tech companies to undergo a national security review before listing in other global markets like the U.S. earlier this year.
Danny Fenster – The American journalist was freed from prison in Myanmar on Tuesday and flew out of the country with former U.S. ambassador to the UN Bill Richardson who helped negotiate his release. Fenster, an editor at English-language news site Frontier Myanmar, was detained in May, months after Myanmar’s military took power in a February coup and faced charges of up to life in prison.
China reported Monday that it produced 357 million tonnes of coal in October, its largest monthly output since 2015. The coal surge is helping ease China’s energy shortage but also highlights the country’s continued dependence on the dirty energy source. The report came just days after global leaders met at the COP26 summit aimed at coordinating a global fight against climate change and achieving net zero carbon emissions. At the summit, China pushed to water down language in a final communique to “phase down” coal rather than “phase out” coal.
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