After the APEC Leaders' Meeting in San Francisco, all eyes are on the presidents of China and the United States — Xi Jinping and Joe Biden — whose meeting produced more ongoing high-level diplomacy and the creation of new channels of communication that are widely expected to further improve China-U.S. relations, stabilize market expectations and inject new energy into the world economy.
In U.S. strategic circles, sober reflection is on the rise about the increasing influence of Cold War mentality in U.S.-China competition. Calls for renewed efforts to stabilize relations are clear.
As the United States seeks to compete with China, it has, unfortunately, been peddling narratives such as “China replacing the United States,” “rewriting the global rules” and “exporting models,” all of which sow the seeds of nationalism and racism at home and aggravate the already strained relationship. But America's strategy on China even leaves some of its Asia-Pacific allies unconvinced, as they have come to reckon that the U.S. could not possibly cover all the losses they would incur if they turn away from China and that continued confrontation between East and West represents a threat to their own security.
Many U.S. companies yearn for a restoration of stable bilateral ties, hoping to mitigate geopolitical risks stemming from doing business in China. Even mega companies with unparalleled market presence such as Apple, Nike and Caterpillar still rely on the Chinese market to underpin their growth projections. As a manufacturing hub, China offers cost-effective production infrastructure, along with a mega consumer market. The success stories are anchored by unimpeded access to China's vast market, and the U.S. government's policies — restrictions on investment, export controls and increased tariffs — only impede and constrain the ability of these companies to do business in China and weigh heavily on their financial performance and profitability.
A flurry of high-level visits by U.S. officials to China indicates an improvement in bilateral ties, including the visits by Secretary of State Antony Blinken, Treasury Secretary Janet Yellen, climate envoy John Kerry and Commerce Secretary Gina Raimondo. Senator Chuck Schumer also led a bipartisan delegation to China. These visits reflect a desire to manage differences between China and the U.S. in various areas. California Governor Gavin Newsom traveled to China recently and unleashed potentials for local cooperation on climate change.
Other countries expect China and the U.S. to manage their relations rationally and pragmatically, to acknowledge common challenges and to identify new areas of cooperation. APEC itself is an important organization for the Asia-Pacific region to strengthen multilateral economic ties, exchanges and cooperation. Under its theme — “Creating a Resilient and Sustainable Future for All” — the APEC meeting 2023 aimed to maintain interdependence, seek common interests, maintain an open multilateral trading system and lower inter-regional trade barriers.
The U.S. approaches its relationship with China under a competitive framework, and often overreacts on specific issues. This is not conducive to managing the relationship and leads to destabilizing consequences. That is why countries in the Asia-Pacific region are particularly keen for the two countries to live up to their respective roles as responsible and stable world powers, injecting stability into an increasingly unstable world.
At the same time, a wide range of global stakeholders — governments, investors and businesses — are eager to see the two major powers identify areas of cooperation in such areas as nuclear arms control, climate change and AI regulation.
The China U.S. summit on the sidelines of the APEC meeting has provided an ideal setting for China and the U.S. to rekindle a spirit of collaboration and cooperation as the two sides regain momentum and build mutual trust. It's reminiscent of the framework of cooperation fostered at the G20 summit in Bali last year.
On one hand, a constructive pivot in bilateral relations would expand market access and reduce regulatory barriers in both countries. Improvements in geopolitical dynamics could help increase recognition of business brands, which in turn would reduce nationalistic sentiments among consumers and enable companies to expand their footprints.
Uncertainty and ambiguity in the China-U.S. relationship will hinder strategic planning and deter potential investment. Enhanced dialogues between the two sides could bring clarity to the political and economic trajectory and create a safe, secure, transparent, predictable and fair business environment, which is critical for business decision-making. This trend toward stability will not only benefit businesses but will also strengthen the overall bilateral relationship.
More important, a stable relationship and bilateral cooperation will serve as a catalyst for global stability and prosperity. In the relationship between the world's largest developing country and the largest developed country, how they manage their tensions and frictions will shape the future direction of the international landscape. These complexities underscore the importance of the San Francisco summit.
First, a more stable relationship will mitigate the risk of trade disputes and political tensions, creating a more predictable market environment. Second, it will facilitate effective policy coordination in international institutions, ensuring a more resilient and inclusive system of global governance. Third, the meeting between the two heads of state was an opportunity to redefine the narrative between China and the United States, find a balance between competition and cooperation and set a precedent for a more predictable and stable future relationship in which global challenges can be tackled together.
Cooperation between the two countries could also drive world economic growth, bolster trade opportunities and open up more economic dialogues worldwide, which would stimulate cross-border investment, elevate capital and cultural flows between countries and energize the world economy.
