US-China ties quietly mending even as global turmoil surges

By Bloomberg News

With the Israel-Hamas war further dividing a world shaken by Russia’s invasion of Ukraine and elevated inflation, US-China ties are suddenly providing cause for some optimism.

President Xi Jinping’s government has engaged with a flurry of US leaders since June, with the Chinese president telling a visiting senator this month there were “a thousand reasons to make US-China relations better, and no reason to make them worse” — some of his most dovish recent comments on the relationship.

The arrival of China’s Foreign Minister Wang Yi in Washington on Thursday will continue that trajectory. The top diplomat will meet with President Joe Biden during his trip, as he smooths the path for an anticipated leaders’ meeting with Xi next month in California.

While Beijing hasn’t confirmed Xi’s attendance, the Chinese leader on Wednesday told the governor of that state, Gavin Newsom, that their nations’ “interests are closely intertwined.” The US governor said Thursday there had been “a demonstrable shift compared to where we were a few months ago.” 

Both sides have reasons to foster friendlier ties ahead of the Asia-Pacific Economic Cooperation forum in San Francisco. Beijing needs a more stable geopolitical environment to woo foreign investors as China’s economy slows, while the US wants to diffuse military and economic threats from the Asian powerhouse.

Chinese officials “understand that there is a small window of about three months to do this before the US goes into full blown election mode where both Democrats and Republicans will take tough positions on China,” said Theresa Fallon, director of the Brussels-based Centre for Russia Europe Asia Studies.

Still, the relationship remains fragile. China and the US have taken opposite stances on the wars in Europe and the Middle East, and Washington is tightening trade curbs to kneecap Beijing’s access to cutting-edge tech. 

A better-than-expected meeting between Biden and Xi about a year ago — the last time the two leaders spoke face-to-face — was soon derailed by an alleged Chinese spy balloon that passed over the US, underscoring how fast small gains can be lost.

Any meeting between Xi and Biden would mostly be “symbolically important,” according to Dongshu Liu, assistant professor specializing in Chinese politics at the City University of Hong Kong.

“Beijing is trying to at least calm down the tension between China and the US and stabilize relations,” Liu said. “But both sides understand that they cannot make a big compromise because of domestic pressure.”

Relationship Nadir

China’s relationship with the US crashed in August 2022, after then-US House Speaker Nancy Pelosi defied Beijing’s warnings and visited Taiwan — the self-ruled democracy China claims as its own. 

Beijing responded by freezing top-level military dialogue with the US, sparking concern that an accident in the Taiwan Strait could spiral into a conflict between the nuclear-armed powers.  

Now, there are signs military ties are getting back on track. The US Department of Defense confirmed earlier this month it had accepted an invitation to take part in the Beijing Xiangshan Forum next week, the first time China has hosted the event in person since 2019. 

China invited US Secretary of Defense Lloyd Austin to the gathering, Reuters reported citing people familiar with the matter. While the US is sending a lower-level official, in line with precedent, the invitation is symbolic: Beijing has snubbed talks with Austin this year, demanding Washington remove sanctions on China’s defense minister as a condition for such dialogue.

Earlier this week, Xi fired Li Shangfu from that role amid reports of a corruption probe. Replacing the defense minister with a non-sanctioned official may open the door for talks with Austin.

Economic Engagement

Official ties are also improving between economic officials. Since welcoming a flurry of US officials to China in recent months, including Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo, Beijing has kicked off new working groups with the US. 

The first of those meetings dedicated to discussing economic topics with US Treasury staff took place virtually on Tuesday, with a second group discussing financial topics the following day.   

“Dialogue is already improving. With the visits of several of the US leadership into China this year, I can see some important shifts in both the tone and in the practice,” Piyush Gupta, chief executive officer at DBS Group Holdings Ltd., said on the sidelines of a business forum in Shanghai earlier this month. “People are now talking and they actually have an agenda of action. I am encouraged by that.”

The meetings come as Xi has stepped up efforts in recent weeks to support China’s long-term economic growth. The Chinese leader also made his first known visit to the nation’s central bank since becoming president a decade ago — telegraphing his focus on economic issues.

Conflict Zones

As communication lines rebuild, thorny topics remain, such as Xi’s support for Russia. The Chinese leader gave President Vladimir Putin a diplomatic platform at a major summit in Beijing earlier this month, defying Biden’s calls for Xi to stand against the Russians’ war.

China’s refusal to condemn Hamas after its deadly incursion into Israel is also a point of contention. Washington’s ambassador to China, Nicholas Burns, called on Xi’s government to denounce terrorism by Hamas in an interview with Bloomberg TV last week.  

“China’s position on the crisis continues to put it at odds with the US, and the crisis will likely appear high on the agenda” for Wang this week, analysts at the Eurasia Group wrote in a recent note.

Both nations’ ties to leaders on opposite sides of the conflict could be a point of collaboration, according to Dawn Murphy, associate professor of National Security Strategy at the US National War College. “They could bring all parties together to prevent an escalation of this into a broader regional war,” she said. 

When Wang visits Washington, he’ll sit down again with US National Security Adviser Jake Sullivan, following up from two days of “candid” talks held in Malta last month on Taiwan and Russia. 

The sheer amount of time Wang has put into negotiating with Sullivan ahead of APEC means the meeting has the potential to surprise on the upside, according to Richard McGregor, senior fellow for East Asia at the Lowy Institute. 

“The key benchmark will be whether Washington has been able to persuade Beijing to put some guardrails on their head-to-head competition,” he said, “particularly in terms of military competition.”