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  1. Home
  2. / Investing
  3. / Global Equity

Biden Meets Xi for the First Time as President

On the sidelines of the G20 Summit in Bali, Xi and Biden shook hands and shared warm smiles, which could help thaw a frozen relationship.
By ALEX FREW MCMILLAN
Nov 14, 2022 | 06:25 AM EST

Joe Biden is putting all his diplomatic skills to the test today as he holds his first face-to-face meeting as U.S. president with Chinese President Xi Jinping. The two men shook hands on Monday evening on the Indonesian resort island of Bali.

The conversation between the leaders of the world's largest two economies will help set the tone for the rest of Biden's term in office. At a time that U.S.-Sino tensions are at or close to an all-time low, Biden says he'll use the meeting as a reset of sorts.

"We have very little misunderstanding," he told reporters in Cambodia, where he had been taking part in a meeting of Asian nations. "We've just got to figure out where the red lines are, and what are the most-important things to each of us going into the next two years."

Indonesia is this year's host of the G20 grouping of the world's largest economies. Biden has already met with Indonesian President Joko Widodo, known at home by his nickname Jokowi, with the two leaders discussing how to deepen ties between the two countries. Indonesia will also chair ASEAN, the Association of Southeast Asian Nations, in 2023.

One of U.S. President Joe Biden's chief achievements in office has been to restore U.S. relevance and status on the diplomatic front. As a seasoned foreign-policy hand, he has been quite effective at garnering support for a collective response to the threats posed by Russia in Ukraine and through China's muscular expansionism in Asia.

Besides Jokowi, who helms the world's fourth-most-populous nation, Biden has also met in the past few days with other key Asian allies and democracies. He took part in a three-way meeting with Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk-yeol while in Phnom Penh, the Cambodian capital, as well as meeting separately with each man.

Australian Prime Minister Anthony Albanese, who took office in May, also got face time with Biden while in Cambodia, which was hosting the annual East Asia Summit, which has grown from 10-nation ASEAN to include 18 countries as it now stands.

Australia has, if anything, been in an even more combative relationship with China, which has imposed unofficial bans on a series of Aussie goods. Albanese shared some small talk on Saturday night with Chinese Premier Li Keqiang while at the event's gala dinner, the first top-level contact between the two nations in three years, since Australia started demanding an independent inquiry into the origins of Covid-19. We'll see if Albanese now meets with Xi in Bali.

Biden will visit Australia next year for a meeting of the "Quad" grouping of major Asia-Pacific democracies, comprised of the United States, Australia, Japan and India. It is through such groupings of nations that Biden will be and has been most successful at imposing tariffs, sanctions and remedial actions if nations such as China and Russia behave in ways contrary to democratic beliefs or the oft-repeated "rules-based international order."

Biden's approach works because China is a past master at using one-on-one trade discussions with individual nations to strike deals that keep potential critics sweet. It's through multinational pressure and agreements that Biden has been most-effective at pushing action on countries with agendas that fly in the face of democracy and civic freedoms.

We will await word of what Xi and Biden discuss tonight, although not much in the way of concrete progress is expected to come from the meeting in Bali. Both men are coming off relative success in elections, with Xi having won an unheard-of third term as general secretary of the Chinese Communist Party, and Chinese commander-in-chief - something that will surely see him also get a third term as Chinese president. Biden, confounding the polls, saw his Democratic Party deliver the best mid-term performance for a sitting president in 20 years.

China suspended virtually all working-level cooperation with the United States after Speaker of the House Nancy Pelosi visited Taiwan in August. Since then, it has refused to discuss a shared response with the United States to issues such as climate change, with its climate envoy saying at the recent COP27 summit that the Pelosi visit had "hurt Chinese people's feelings."

The Biden-Xi meeting could give renewed impetus to talks on topics like climate change, or the illegal drug trade, or intellectual-property protections, where it's clear there can be win-win outcomes for both nations. China had been hoping that Biden would ease Trump-era tariffs once he took office. While the Biden administration has looked at the topic it has yet to make meaningful change.

In fact, Biden's most-significant recent initiative was to block companies from selling high-end semiconductors, tech or equipment to China, or using operations based on U.S. technology to make chips for China. Analysts say that will set back China's hopes to build a homegrown semiconductor industry by a generation.

Although this is Biden's first meeting with Xi as president, he said on the campaign trail that he likely spent more personal time with Xi, then also vice president and a rising star of Chinese politics, than any other world leader while he was U.S. vice president.

The two men will look to build on that shared personal history. "We spent a lot of time together back in the day when we were both vice presidents and it's just great to see you," Biden told Xi today, Reuters reports.

The talks, still going on, are expected to last a few hours this evening. The White House has bandied about the phrase that the conversation will "build a floor" to the relationship with China. The aim is to prevent U.S.-China ties from worsening beyond this point. On the optimistic side, the meeting of the two world leaders may potentially lay a foundation for areas where the two countries can cooperate, and begin to work together again.

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At the time of publication, Alex Frew McMillan had no position in the securities mentioned.

TAGS: Investing | Markets | Politics | Stocks | Trading | China | Australia | Global Equity

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