Biden, Xi Open Summit Stressing Need to Improve Cooperation

(Bloomberg) — U.S. President Joe Biden and Chinese counterpart Xi Jinping kicked off their first meeting in more than a year on Wednesday with hopes of repairing a relationship strained by economic competition and military and diplomatic missteps.

“I’ve always found our discussions straightforward and frank,” Biden said to open their much-anticipated summit, acknowledging the difficult conversations ahead. “We haven’t always agreed, which [has] not surprised anyone, but our meetings have always been candid straightforward and useful.”

“We have to ensure that competition does not veer into conflict. And we also have to manage it responsibly,” Biden added.

Xi called the US-China relationship “the most important bilateral relationship in the world.”

“For two large countries like China and the United States, turning their back on each other is not an option,” Xi said. “It is unrealistic for one side to remodel the other, and conflict and confrontation has unbearable consequences for both sides.”

The carefully choreographed meeting was held south of the Asia-Pacific Economic Cooperation summit in San Francisco on the sweeping grounds of the Filoli estate on the eastern slope of the Santa Cruz mountains.

The gathering, among 16 acres of lush autumnal gardens, belies a heady agenda, with the leaders expected to finalize the resumption of military-to-military communication in hopes of avoiding confrontations in the Pacific, as well as a comprehensive Chinese law-enforcement effort to crack down on fentanyl manufacturing and distribution networks.

The leaders greeted each other and shook hands on a red carpet unfurled outside the secluded century-old Georgian manor nestled on the southern end of the Crystal Springs Reservoir. Their talks are also expected to include discussion of artificial intelligence, the status of Taiwan, and conflicts involving Ukraine and Israel. Chinese officials are likely to seek the rollback of export controls, tariffs and restrictions on investment in the U.S.

The meeting is expected to follow roughly the same format as their previous gathering in Bali, Indonesia, in November 2022. Biden and Xi began with a meeting with close advisers. Treasury Secretary Janet Yellen, Secretary of State Antony Blinken and Commerce Secretary Gina Raimondo are attending the talks, with Chinese Finance Minister Lan Fo’an and Commerce Minister Wang Wentao among the Chinese delegation.

Following a break, a larger group will gather for additional talks, with the total meeting time expected to stretch for hours.

Once they conclude, Biden is expected to hold a press conference, while Xi returns to San Francisco for a dinner with top U.S. executives.

U.S. and Chinese officials spent weeks discussing the agenda and the structure of the event and aides acknowledged every detail of the visit would be scrutinized.

The selection of Filoli evokes the informal meetings held between Xi and former President Barack Obama at Sunnylands outside Palm Springs, where the pair literally and metaphorically rolled up their shirtsleeves for days of talks.

Hours ahead of the Biden-Xi meeting, the U.S. and China released a statement detailing new commitments to cooperate on climate change, with promises to build carbon-capture facilities, curtail power-sector pollution and take aim at the full suite of greenhouse gases.

The statement from the world’s top two greenhouse-gas emitters is seen as injecting new momentum ahead of the crucial COP28 summit that starts in Dubai this month, boosting the odds of successful negotiations, while underscoring their shared alarm about climate change.

Tackling global warming is one of the rare areas of consensus between Beijing and Washington.

One U.S. official, briefing reporters ahead of the meeting on condition of anonymity, said that because of the power Xi had consolidated within China, the meeting offered a rare opportunity to make changes in the relationship — and that the stakes couldn’t be higher.

Ahead of the meeting, Biden said his goals included helping China’s struggling economy, provided that growth didn’t come at the expense of US intellectual property.

“If the average citizen in China was able to have a decent-paying job, that benefits them and benefits all of us,” he said. “But I’m not going to continue to sustain the support for positions where if we want to invest in China, we have to turn over all our trade secrets.”

The U.S. did not plan to announce changes to its tariff regime or sanctions against Chinese entities despite expecting Xi to push the issue, the U.S. official said.

Economic insecurity may partly explain Xi’s willingness to engage despite high-profile clashes earlier this year over an errant Chinese spy balloon and then-House Speaker Nancy Pelosi’s visit to Taiwan. A crisis in China’s property sector has weighed down the country’s post-pandemic recovery, with its economy no longer on course to surpass the U.S.

“The world has emerged from the Covid pandemic but is still under its tremendous impacts,” Xi said at the start of the meeting. “The global economy is recovering, but its momentum remains sluggish. Industrial supply chains are still under the threat of interruption and protectionism is rising. All these are grave problems.”

Foreign holdings of the nation’s equities and debt have fallen by about 1.37 trillion yuan ($188 billion), or 17%, from a December 2021 peak through the end of June this year, according to Bloomberg calculations based on central bank data.

Still, bilateral trade between the U.S. and China amounted to almost $760 billion in 2022, while the value of investments in physical and financial assets stood at $1.8 trillion.

Both leaders must tread carefully for their domestic audiences, in particular Biden, who faces a tough reelection.

A Bloomberg News/Morning Consult poll this month found 46% of swing-state voters said they trust former President Donald Trump, the GOP frontrunner, on China, compared to 34% for Biden.