European Council President Charles Michel travelled to Beijing on the 1st of December, following German Chancellor Scholz’s visit one month ago. The two meetings happened in two different contexts, as Asia has hosted an exceptional summit season over the past weeks. In both meetings, however, the issue that took center stage was Europe’s dilemma over China, as the US is upholding its intention to “vigorously compete” with Beijing, albeit seemingly trying to ease tensions on the surface. Xi Jinping, on the other hand, appeared relaxed and smiling during recent summits. He held bilateral meetings with several foreign leaders, downplaying the “ideological” aspects of his country’s confrontation with the US. During these meetings, both European and Asian countries revamped their relations with Beijing, as they prefer to avoid the short-term economic cost of decoupling from China. And although Michel’s visit failed to deliver any immediate results, it represented the return of European openness towards China. In the meantime, however, things at home look grim for Xi. Protests against his zero-covid policy have spread to major urban centers such as Shanghai and Chongqing, leading to a systemic review of this policy. Will Xi Jinping manage to strike a balance between the need to contain domestic instability, boost the economy, and ease tensions abroad? As of now, it seems that Xi Jinping managed to partially bypass US pressures to contain China, but will it last? And what if the EU won't follow Washington’s line on China? How will this affect transatlantic relations?
Why it matters
- Biden and Xi seek a healthy rivalry. The bilateral meeting between Biden and Xi Jinping, the first of its kind held in person, was the highlight of the G20 Summit in Bali. It was a necessary dialogue, since the relationship between the two nations had gradually worsened after Speaker Pelosi’s visit to Taiwan in August. However, amidst declarations about avoiding a new Cold War, Biden made it clear that the US won’t step back from competing and investing “in sources of strength at home” and from aligning “efforts with allies and partners around the world”.
- America is struggling to convince its allies to double down against China. Prior to the Biden-Xi meeting, Washington released an unprecedented set of measures to control semiconductor exports to China. Soon thereafter, German Chancellor Scholz’s visited Beijing to relaunch economic ties with China. Washington’s move hit China’s most strategic economic sector and Scholz was blamed by many Western commentators for breaking the European and Western front against Beijing. However, in their bilateral meetings with Xi, top European economies like France, Italy, and Spain seemed eager to follow the German path and improve economic relations with China. In addition, the Dutch government refused to blindly adopt the US’ policy and is coordinating with South Korean President Yoon on how to keep the door open to the Chinese market for their semiconductor industries. One major European ally Washington US can count on is the UK. Prime Minister Rishi Sunak has adopted the view of his predecessors on China, and highlighted that the “” of collaboration with Beijing is over.
- A smiling Xi stresses the importance of business. Several “unscripted moments” between Xi Jinping and other leaders occurred during the summits, such as the confrontation with Canadian Prime Minister Trudeau. However, the body language of a maskless Xi Jinping in Bali and Bangkok was read as warm and his goals as clear: to counter the US’ narrative of China being an unreliable autocracy and a geoeconomic threat. China wants to avoid forced isolation, and after meeting Joe Biden, Xi explained that China sees itself as a democracy – even if with its own characteristics – and warned that decoupling is dangerous for the global economy. With this message, Xi relaunched talks with countries with whom relationships have been cooling since the pandemic, such as Australia, Italy, and Japan.
- Competition expands. Xi Jinping will take part in a summit in Saudi Arabia from the 7th of December to discuss the relations between the two countries. It is the second time Xi visits the country, and this trip comes at a time increasingly strained US-Saudi Arabia relations. Riyadh and Washington have been partners for a long time, but in recent years China’s importance to Gulf countries has been growing. China is Saudi Arabia’s largest trading partner, while Saudi Arabia is China’s main oil supplier (81 million metric tons imported in 2021). Moreover, there is the possibility that Riyadh could become part of the BRICS, causing concern in Washington over China’s expanding influence in the region. The US has criticized the Saudi proposal to accept oil payments from China in renminbi, a few weeks after Russia’s invasion of Ukraine. With the US turning its attention to other areas of the world, such as the Indo-Pacific, China is ready to fill the vacuum in the coming years.
- Macron's Indo-Pacific France. Prior to Charles Michel’s trip and the other summits, French President Macron had already strengthened his country's role in shaping EU policy in China. On the 18th of November, he spoke at the APEC Summit, suggesting that France is a resident country in the Indo-Pacific. Along with Angela Merkel, Macron supported the bilateral investment agreement with China (CAI, Comprehensive Agreement on Investment), signed in 2020. During his term as chair of the EU’s rotating Presidency in the first semester of this year, Macron has also tried to pivot Europe’s outlook towards the Indo-Pacific. In February 2022, France even organised an Indo-Pacific Forum that was overshadowed by the Russian invasion of Ukraine. At the same time, Macron – who will travel to China in January to meet Xi Jinping – recently pledged to reduce confrontation, criticizing the pursuit of hegemony by the two “nervous elephants” US and China.
Our Take
Recent summits have confirmed both Asia’s centrality in geopolitics, and the impact of US-China competition on other countries. As clear strategic blocks have yet to emerge, it is difficult to draw a stable scenario for the future. Moreover, other countries in Europe and in Asia seem eager to avoid the short-term costs of a quick decoupling from China. Still, Beijing will have to convince the international community that it is not a geopolitical threat and that economic integration with China brings more opportunities than challenges.
Spotlight: Protests in China
From Shanghai to Chongqing, protests over Xi’s stringent zero-covid measures are destabilizing the country. After the 20th Party Congress and Xi’s relaxed attitude during the international summits in November, many hoped that he would loosen the Covid-zero strategy at home. But with new infections peaking, the concern remained that China’s population would further need to deal with strict measures. Exhausted by the restrictions imposed in the past years, Chinese citizens took to the streets. The protests were sparked by a deadly fire in Urumqi, Xinjiang, with some claiming that the evacuation and rescue process was slowed down due to covid restrictions. Despite crackdowns, the claims of protestors did not go unheard, as the government gradually lifted a wide range of “zero-covid” measures, first in major cities, then nation-wide. Targeted lockdowns are still among the government’s options, but we can expect that restrictions will be eased further. However, we can also expect that the dilemma between the need to boost economic growth and keeping the pandemic under control will be tested soon enough, when the number of cases will probably surge.
Experts’ views
The G20, seen from Bali
Indonesia took a leading role as the President of G20 this year. As the only ASEAN member state that represents ASEAN in the G20, Indonesia played a significant role to shift the global agenda towards Asia, especially Southeast Asia. Indonesia placed important emphasis on challenges to regional economies and COVID-19 recovery in the region. Furthermore, Indonesia's membership in the G20 brought opportunities to achieve the interest of emerging economies of Southeast Asian states. Furthermore, ASEAN could develop its growing regional market thanks to the G20 as its members are looking forward to enhance economic cooperation in the region. The developing regional market would accelerate the economic growth within the region within the ASEAN Regional Comprehensive Economic Partnership (RCEP). As Indonesia is also the next chair of ASEAN, there is a potential to ensure regional development and the realization of ASEAN Centrality. Eventually, Indonesia's long-term leadership position in the region will be strengthened.
Gilang Kembara, Centre for Strategic and International Studies
US-China competition after the Xi-Biden meeting
The Xi-Biden meeting in the sideline of the G20 was significant as it sent a signal to the world that the leaders of the two largest economies are willing to control harms to their bilateral relations in the interests of themselves and the world. Hopefully more regular official exchanges can be resumed in the near future. It was the urgent multiple crises that helped bring out this outcome. But we have many reasons to keep cautious about the future course of the two countries’ relations due to structural factors. We need to see whether the US is willing to respect "the first red line" China drew for the two sides to avoid on the Taiwan question. There was no any consensus reached on stopping efforts of technology and economy decoupling. The current US administration has only 2 years left, which makes any political commitments of President Biden vulnerable when situations change.
Ye Yu, Shanghai Institutes for International Studies (SIIS)
What and Where
What has the COP27 brought to Asia?
China and India are the first and third largest emitters of greenhouse gas. Along with the US, they must work together to reduce their environmental impact and meet their commitments. At the COP27, held in Egypt from the 6th to the 18th of November, the US and China revamped their climate cooperation talks, which were suspended by China following Pelosi’s visit to Taiwan, and envoys from the two nations seemed ready to cooperate on the topic. While COP27 has not produced game-changing results, one noteworthy outcome for Asia is the “loss and damage” plan. Strongly advocated by the G77 – a group of 134 developing nations that includes China, India and other Asian countries – it would require developed countries to support less-developed countries deeply impacted by the climate crisis. However, since China and India are some of the biggest polluters and largest economies in the world, the EU believes they should actively contribute to funding the “losses and damages”. Will the world’s heavy polluters play a more active role in mitigating the effects of the climate crisis?
Strengthening ties between the US and India
The international events that have taken place in November, such as the G20 in Indonesia and the APEC summit in Thailand, have allowed for several bilateral meetings between heads of state. One such encounter took place in Bali between US president Joe Biden and Indian PM Narendra Modi. The reliability of India as a partner in the Quadrilateral Security Dialogue, commonly known as QUAD, with Australia and Japan, and in the I2U2 grouping – comprising of India, Israel, the United Arab Emirates, and the US – has been contested by some, due to the country's long-standing relations with Russia. However, the South Asian country has often stressed its allegiance to these US-led coalitions. During the meeting in Bali, India and the US were able to dispel doubts over the solidity of their economic and strategic partnership. The two leaders expressed their willingness to strengthen cooperation in the QUAD and I2U2, and to extend it to strategic sectors such as technology. Also, an increase in cooperation between the two countries in strategic sectors will likely occur, as both are trying to reduce their dependence on China.
Malaysia’s political instability is not over
On Saturday 19th of November, 73% of Malaysia's 21.1 million eligible voters elected the country’s lower house of parliament and the Prime Minister. Many hoped that this election would end the country’s three years of political instability, but the outcome instead seems to reflect that same instability. For the first time in the history of Malaysia, the election resulted in a hung parliament, since no party has won an absolute majority (111 out of 222 total seats). The frontrunners of this election, Anwar Ibrahim of the Pakatan Harapan (82 seats), and Muhyiddin Yassin with his Perikatan Nasional (79 seats), were particularly active in campaigning for support. On the 24th of November, the deadlock ended, and after days of consultations between the King and the parties an agreement was reached: Anwar Ibrahim, for years considered the opposition leader, is now the PM of the country. To prove that he has the numbers to rule, Ibrahim plans a confidence vote in December hoping for no plot twists.
The Philippines tight roping between China and the US
Once again, tensions are rising between the Philippines and China in the South China Sea (SCS). Allegedly, the Chinese coastguard “forcefully retrieved” debris, possibly from a Chinese rocket, which a Filipino vessel was already taking away. It is not the first time that countries in the South China Sea, such as the Philippines or Vietnam, lament the presence of Chinese vessels in their national waters. China claims that its national waters extend to around 85% of the SCS, thus encroaching on other Southeast Asian countries' waters and giving rise to disputes over the territories in the sea. However, the timing of this latest controversy is noteworthy, as it has coincided with US Vice President Kamala Harris’ visit to the Philippines. The meeting between Harris and Marcos Jr. proceeded as planned. The two met on an island close to disputed waters in the SCS, and Harris stated that, in the case of an attack on the Philippines, the US would intervene.
Looking Ahead: China will no longer be the world’s most populous country
In 2023, India will surpass China as the most populous country in the world – with 1.428 and 1.425 billion people respectively. The United Nations had predicted that this event wouldn’t happen until 2027, but as China’s birthrate declined, India overtook it. However, India’s situation isn’t so simple. A growing population requires more resources, and analysts fear that many might be left to starve. Few countries will escape their declining demographic growth. One such example is that of Pakistan who 2040 will almost equal the US, with its 320 million people. Indonesia and Vietnam are projected to see a slow but steady increase in numbers for 2030 and 2040. On the other hand, Japan, already struggling due to its aging workforce, will see a decline of 1 million people in its population between 2022 and 2040. Indeed, the growth of the world’s population has slowed since the 1960s, with the more developed countries facing an ageing population and a decline in births.
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