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China observed carefully the November 3 election campaign and outcome in the United States, although it was slow in responding to the electoral victory of Joe Biden. Nevertheless, at various levels, Beijing had articulated its responses and was preparing for the next Administration.
President Xi Jinping’s delayed congratulatory message to President-elect Biden came on November 25th with a message calling for cooperation, and managing differences. In contrast, in 2016 when Donald Trump was elected, Xi was one of the earlier leaders to greet the new President. Since 2013, when the Chinese side articulated the “new type of major power relations” at Sunnylands with President Obama, its operative phrase was “non-conflict, non-confrontational and win-win cooperation”. However, as China’s ambitions increased to nudge the US away from Asia, the Trump Administration’s push back policies on tariffs, Taiwan, Tibet, Xinjiang, South China Sea, Indo-Pacific, Huawei and the Communist Party itself signaled the emerging conflict between the two.
The US Secretary of State Mike Pompeo’s speech at President Richard Nixon Presidential Library that the engagement policies pursued by the US since 1971 have failed to deliver and the emergence of bi-partisan consensus in the US on China have rattled Beijing with the prospect pf a systematic “decoupling” process and an emerging new Cold War between the two. The spread of Covid-19 from Wuhan to the rest of the world, including the US (with an estimated half a million travellers from Wuhan before the lockdown on January 23rd) further led to tensions with President Trump calling it “Chinese virus”, while China retorted by designating as “political virus”.
While foreign minister Wang Yi dismissed Pompeo’s statement as a reflection of “Cold War mentality” he agreed that the situation is “most complicated”. Wang reminded the US of over 70,000 American companies’ $700 billion investments in China that are still making profits despite Covid-19. They also generate 2.6 million jobs in the US. He nevertheless said bilateral relations are facing the “gravest challenge”. Wang suggested “three lists” to be observed, viz., dialogue, cooperation and managing differences properly. This has been a standard practice of China to involve in endless discussions without resolving the main issues of concern.
Overall, China’s bottom line is how it can consolidate its position as the 2nd largest economy (and the largest by 2028). This could further elevate China’s stakes and make the US unable to penalise Beijing on any count. China’s minimalist demands on the Biden Administration are likely to be on arms sales and visits to Taiwan, Tibet travel and the Dalai Lama’s succession issue, freedom of navigation in the South China Sea, Xinjiang and Hong Kong arrests. China’s maximalist positions are likely to trigger much friction with the US specifically on China becoming a global and regional power, a leader in 5G and artificial intelligence, with its Belt and Road Initiative forging ahead, its “community of common destiny” gaining friends and allies in the world, with China poised to “occupying the centre stage” as the 19th Communist Party Congress decided in 2017.
In relation to the Biden Administration, China could propose a few areas of cooperation, realising the potential benefits of associating with the US. China may send a high-level business delegation to the US or conduct an online summit with the new leader given the Covid-19 distancing norms. It could approach Washington by taking a cooperative stance on climate change, multilateralism, the WTO dispute mechanism and other issues closer to the Democrats. China could even propose joint vaccine development against the pandemic, although the US and Russia have refused to join the UN-led Covax initiative. China is also likely to press the US to rejoin the World Health Organisation to enhance the latter’s credibility. Counter-terrorism could be another subject of cooperation between the two.
China’s negative list for the incoming Administration is likely to be on its “core issues” such as Taiwan, Tibet and Xinjiang but also tariffs, abrogation of the intermediate-range nuclear forces (INF) treaty and the pressure on Beijing to commit to strategic arms reduction measures and also to the travel bans and sanctions on Chinese Communist Party members imposed by the outgoing Trump Administration. The latter led to the intensification of the ideological struggle between the two countries but also, at an existential level, put an end to the growingly influential cadres’ sons and daughters visits to the US.
In this context, China is likely to make big announcements on investments, tariffs, the purchase of soyabeans, beef and other products from the US but in practice not implement the same while seeking further concessions from the US. China is also likely to nudge North Korea and Iran to step up their confrontation with the US, as a useful distraction in line with the advice of ancient strategist Sun Zu. With its recently launched “dual circulation” strategy of balancing exports and imports and enhancing domestic consumption, in addition to the Made in China 2025 campaign, China also wants to distance itself from the US and other countries.
For the two to tango, China’s minimal list has to match with the US list. The American business lobbies have been complaining about the protectionist trends in China despite its leaders’ statements at Davos on their resolve to lead globalisation. For instance, on market access, Washington wants 100 percent wholly owned companies to be allowed in China, American credit card entry, licenses to be granted to US companies and an open market for the sale of US biotech seeds. The US trade deficit with China – a major subject in all election campaigns in the US – is ballooning despite the January 2020 deal, which has not been implemented. The trade deficit in favour of China amounted to a whopping $412 billion in 2018.
Also, in a speech in April this year, President Xi Jinping observed that China will “develop powerful retaliation and deterrence capabilities against supply cut-offs by foreign parties”. According to a US Department of Defense report, China is intending to use force to secure supply chain management in the Asian region. Of the three major global production chains in the US, Europe and Asia, the latter has grown substantially thanks to the rise of Japan, China, India, Vietnam, Indonesia and other countries but China wants to dominate. With Covid-19 disruptions and the recent campaign for “sustainable supply chains” by the Indo-Pacific countries, China is feeling that it is losing the initiative and hence wants to resolve the issue in its favour if need be by the use of force.
Another red line of the US is the penchant of the Chinese businesses to influence the decision-making bodies in the US through mergers and acquisitions or even hostile takeovers. In the 1990s, the US Congress restricted China’s offshore oil company CNOOC from taking over Unocal. Recently, Alibaba’s Ant Group – which is in trouble in China – intended to take over MoneyGram International. Yet the pressure from China is mounting.
There are also other restrictions adopted by the outgoing Administration that may come in handy for the new Administration. In any case, the Republican-dominated legislatures could pose challenges to the new dispensation if it alters the recent measures which have resulted in over 1,000 China’s military-connected researchers fleeing from the US; over 1,000 Chinese students being under watch for espionage or other activities; shutting down of Houston’s Consulate of China and others. The “bipartisan consensus” as reflected in the December 2017 US National Security Strategy report or the recent State Department report on “The Elements of the China Challenge” have put emphasis on the critical competitive factor in relation to China. This would be hard for the new Administration to jettison. Of course, while it is true that the “order obsessed” Chinese leadership was awakened by Trump’s unpredictable policies, there is a lurking feeling in China that Biden could be more systematic and coordinated in his response to China’s rise in comparison with the Trump Administration.
Leading specialists of US policies in China as well have not been too optimistic about the new Administration. However, much like the post 9-11 counter-terrorism global consensus that distracted the then Bush Administration from pursuing “strategic competition” with China in 2001 by launching disastrous campaigns in Afghanistan, Iraq and other countries, the current Covid-19 and domestic issues could distract the Biden Administration as well – with the field wide open for China to realise its “strategic opportunities” once again.
Impact on India
China’s re-adjustment to the Biden Administration has major implications for India as for other countries. As with the bipartisan consensus in the US about China, there is also the pervasive bipartisan consensus on the India policy – with the latter seen in a generally positive manner. The US National Security Strategy for more than a decade has highlighted that differentiation vis-à-vis China and India. The US and India like to project themselves as “natural allies” and have cobbled together foundational agreements. Both are part of the 2017-formed Indo-Pacific and did re-start the Quadrilateral Security Dialogue and four-nation navies maritime Malabar exercise in November this year.
On the backdrop of the continuing border tensions and troop mobilisation between India and China, that led to the killing of 20 Indian soldiers on June 15 and violating all bilateral agreements between the two countries since 1993, and to cope with the emerging challenges in the Indo-Pacific, the US and India are likely to further strengthen their relations. The recently enacted US law on Tibet and the Dalai Lama’s succession has major consequences for India, where many Tibetans have taken refuge. India has long made it a point to help preserve Tibetan Buddhism and its unique identity.