Why the US and China are making nice – for now

For China, the pressing imperative is to reassure foreign investors and revive its economy
For the US, which has its hands full with Ukraine and Gaza, establishing guardrails with China is an urgent need

Tiong Wei JieandLi Mingjiang

Published: 5:30am, 22 Nov 2023

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Tumultuous US-China relations took a turn for the worse at the start of the year after the US air force shot down a Chinese balloon six nautical miles off the US east coast. China called it an “obvious overreaction”; the US called it an “unacceptable violation” of sovereignty. Few would have predicted a detente so soon, but this is exactly what has happened.

There was cautious optimism in May, after US President Joe Biden spoke of an imminent thaw in bilateral relations at the Group of Seven summit in Hiroshima, though many analysts remained unconvinced. This was understandable, given the thorny issues dogging US-China ties.

Since then, however, both countries have taken concrete steps to defuse tensions. In June, Antony Blinken went to China in what was the first visit by a US Secretary of State since 2018. Post-meeting statements on both sides conveyed a positive tone, acknowledging candid discussions and suggesting a willingness to maintain dialogue.

Subsequently, a flurry of meetings took place between senior officials. In September, US-China working groups were established to focus on economic and financial affairs, to facilitate discussions and conflict management. Last month, US delegates attended the Xiangshan Forum in Beijing, raising hopes of a return to high-level military communication. US-sanctioned former Chinese defence minister Li Shangfu has fallen from grace and his successor could refresh relations.

Last week’s Asia-Pacific Economic Cooperation (Apec) forum brought more hope as Biden and Chinese President Xi Jinping met on the sidelines. They agreed to restore US-China military-to-military dialogues. The two countries have also pledged to cooperate on narcotics, artificial intelligence and climate change.

A confluence of factors sparked this detente. For Beijing, the pressing imperative to revive its economy is likely to have driven its decision to improve ties with the US. China’s economy has been facing pressing challenges since its abrupt post-Covid reopening late last year.

These include depressed domestic consumption, a property market in turmoil, growing local government debt, a high youth unemployment rate and a lack of confidence among the country’s business elite. China has also struggled to attract foreign investors amid the “de-risking” campaigns pushed by various Western countries.

In recent months, Beijing has signalled its resolve to surmount these challenges. Last month, for instance, Xi reportedly made an unprecedented public visit to China’s central bank, the People’s Bank of China. He was accompanied by his economic tsar, Vice-Premier He Lifeng, who is in charge of China’s top finance and economic policy-making body, including trade talks with the US.

Chinese leaders have also gone on a charm offensive to court foreign investors from the West. At a business dinner on the sidelines of the Apec summit, Xi reassured US business leaders that they can continue to invest in China – a sign that Beijing’s decision makers recognise that shoring up US-China economic relations is an important task.

Meanwhile, economic relations with the US have been increasingly fractious since the trade war started in 2018. With subsequent decoupling, direct investment into China has come under pressure as Washington’s policy steers US money away from China in sensitive sectors. No thaw could have been achieved without significant effort from Washington.

03:47

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For US leaders, the political outreach to China may have stemmed from an interest in building “guardrails” in the US-China relationship.

History also shows that pressing external issues can affect the strategic dynamics between the US and China. For instance, the 1972 US rapprochement with China came in the face of the bigger Soviet Union threat. There was also the September 11 tragedy in 2001, after which the US and China pledged solidarity against global terrorism.

Similarly, the US-China detente has come as the US is involved in wars on two fronts – the Russia-Ukraine war and Israel-Hamas war. Even though it is highly unlikely that American boots will ever be put on the ground, the US involvement has come at substantial cost. The US has pledged US$75 billion in aid to Ukraine. Supplying military equipment on both fronts, in Ukraine and Gaza, has reportedly stretched Washington’s defence production capacity.

The impact of America’s involvement in the two wars is such that some defence analysts believe Washington may have to delay its shipments of weaponry and related auxiliary support to its other key defence allies, such as Japan and Australia.

As Washington faces pressing external crises, the last thing it wants is to deal with another emergency in the Taiwan Strait or South China Sea. These considerations are likely to have driven Washington’s effort to stabilise relations with China.

02:41

Marcos Jnr says China showing interest in South China Sea atolls that lie close to the Philippines

A confluence of factors in both countries has sparked the current detente. However, it remains to be seen how long this positive momentum will last. Suffice it to say, it is far from in the interests of either country – or, indeed, the world – should they fight.

Hence, although neither Beijing’s win-win cooperation framework nor Washington’s stance of responsibly managing great power competition has resonated greatly with the other side, the two countries have at least agreed to work towards achieving greater stability and some limited cooperation.

Strengthening communication channels and setting up new ones while cooperating on issues of mutual interest is the recipe for avoiding a further deterioration in US-China relations – and for avoiding a devastating conflict between the two powers.

Tiong Wei Jie is a PhD student in international relations at the S Rajaratnam School of International Studies, NTU

Li Mingjiang is an associate professor and provost’s chair in international relations at the S Rajaratnam School of International Studies, NTU