President Xi exudes bonhomie as business houses gauge a directional shift
The most important summit in recent years just took place. Chinese President Xi travelled to San Francisco to meet US President Joe Biden in a visit that Beijing’s media and foreign office played up to the hilt, the US hardly at all. There are multiple reasons for that. While one spoke enthusiastically of a strategic shift that could shape the destiny of the world, the US President and his team were far more cautious, given the upcoming elections. But the point is whether this newfound and rather shaky camaraderie will impact New Delhi’s security interests at a time when the world is already in flux.
The bonhomie at San Francisco
Chinese media were in chorus in projecting a warm bilateral past and opportunities for the future, a theme that was heaped on in spades by the Chinese leader at a welcome dinner, where he recalled the days when US airmen were rescued by Chinese civilians and troops.
The Foreign Ministry spokesperson was also in rah-rah mode as he spoke volubly on a ‘San Francisco vision’ (i.e., something that could lie ahead) whose outlines are unclear. Neither is there any evidence of ’20 common understandings’ in various fields. President Xi did tick off five pillars for ties that included “that both sides need to work together to form a correct perception, effectively manage differences, advance mutually beneficial cooperation, assume due responsibilities as major countries, and promote people-to-people and cultural exchanges”.
The usually acidic Global Times was equally enthusiastic, but emphasised that US business leaders were more open to business in China. That was more than apparent at the Business Council dinner, where Secretary Raimondo emphasised that the US doesn’t seek confrontation but cooperation, and trade that already creates more than a ‘million jobs’ in the US. Raimondo also wants the Chinese people to do well, and contribute overall to ‘global stability’, and a “level playing field” which translates to more access. That’s all very nice. However, recently, in a repetition of earlier incidents, Chinese police raided the Shanghai offices of US firms – Capvision, Bain & Company and Mintz Group.
In August, the US issued an executive order curbing US investment in the Chinese semiconductor, quantum computing and artificial intelligence sectors. China shot back with export restrictions on two key minerals essential to semiconductor production — gallium and germanium which were imported in tons. As a result, exports from China plummeted — to 1 kilogram. That sent business leaders into a huddle.
And that is just one example. Big names like Microsoft – which provides artificial intelligence services to electric vehicle maker Li Auto and electronics giant Xiaomi, among others – and others like Citigroup and Exxon Mobil, are all lining up for business. And in the coming days, this is where the action is likely to play out. The visit may just have set the direction for that agenda, which is exactly what Xi’s visit is all about.
The official meetings
That aspect is most apparent given the mediocre output from the official side. Given that elections are coming up and bipartisan opposition to China, there was little that Biden could work on. There’s a lot of talk on the deal on Fentanyl – a powerful synthetic opioid that is similar to morphine but is 50 to 100 times more potent – and which in 2021, caused deaths of 80,411, more than ten times the number of U.S. military killed in the post-9/11 wars in Iraq and Afghanistan. The precursors for the illegal trade comes from China via Mexico, with actual production by Mexican cartels, after China itself imposed restrictions on Fentanyl and related substances in 2019. These are not internationally controlled (and are correspondingly legal to produce in and export out of China) yet, and the notice therefore already issued in China refers to these.
China stopped all cooperation in response to then-House Speaker Nancy Pelosi’s visit to Taiwan (2022), but has gone on with its own restrictions on fentanyls precursors as recently as June 2023. It also has a cooperation program with Canada. Meanwhile, the US has a serious heroin problem, with some 500,000 users. In other words, while it is a serious problem, it seems like a ‘deliverable’ of some sort for the visit, with a ‘feel good’ factor. The serious problems are elsewhere.
Climate change as a money spinner
Another feel good aspect is the decision to cooperate on climate change. China is the highest greenhouse gas emitter in the world, followed closely by the US, and neither has made any particular effort to reduce these. US emissions have indeed gone up. Washington has been the outlier in the ongoing COP28 talks, leading resistance against language that would identify richer countries as the main source for the ‘loss and damage’ fund, even though that principle is deeply embedded in the U.N. climate convention and in the Paris Agreement. The final agreements make such funds voluntary, a farce that shows just how little they appreciate the climate catastrophe, particularly in the global south.
China in turn needs to be commit to methane reduction, and the global goal of tripling renewable energy deployment by 2030, featured in the recent G20 New Delhi Leaders’ Declaration. China also resists contributing to multilateral climate finance, on the devious principle that it is a developing country. However, any agreement between the largest emitters is a welcome move, but with little positive outcomes likely, other than cornering ‘Green energy’ technology, which last year totalled $1.1 trillion in investments.
The military aspects
To an extent, the agreement to restart mil to mil links with defense policy coordination talks, military maritime consultation meetings, and direct telephone links between operational commanders, is encouraging. These had also been stalled after 2022 according to the Pentagon, which regards the People’s Liberation army as a ‘pacing challenge ‘, with requests for dialogue ignored. The department has also released images and videos of 15 cases of ‘coercive and risky‘ behaviour against US assets in the East and South China sea that could potentially set off a war. Restarting dialogue will avert accidental incidents, but is hardly likely to prevent intentional actions by either. Taiwan will continue to remain a flash point, and there is no walking back possible for Biden or any other President in future. Having said that, experts note that a Chinese military operation against Taiwan is operationally so precarious as to be almost impossible,while any destruction of a $1.5 trillion economy would be ruinous to all concerned. But ‘operations short of war’ can be expected, which then could slide into open conflict.
For India, there’s a period of flux ahead. Recently, the Chinese footprint has only increased with the largest ever naval exercise which included a Song class submarine and a Type 052DL destroyer, reportedly featuring stealth capabilities. The objective is said to be to safeguard the economic corridor according to PLA officials. Added to that, new analysis from Takshashila points to deepening presence in Doklam as well as military expansion in Tibet and along Ladakh, all points to trouble ahead.
Quite apart from that, the designation by the US of three Chinese entities for supplying components for Pakistan’s missile capabilities underlines that the China-Pakistan relationship is beyond mere ‘trade corridors’. To that can be added the findings by Aid Data shows not just that Chinese lending to Pakistan stood at $67.2 billion, that is about $21 bn more than assessed earlier. Not just that, it holds the largest energy portfolio in Pakistan, than anywhere else. It seems Pakistan is well on its way to becoming a rentier state of Beijing, even as it continues to encircle India in multifarious ways. India will be forced to either spend more on defence, or get even closer to the US and Quad partners to ensure its defence.
Both options have costs – the one takes away scarce finances from development, while the other endangers our freedom of maneuver. For India, the San Francisco meeting will be assessed against the inflow of US investments into China, at a time when Xi, the architect of instability, is up against severe economic stress. Our challenge for one is to quickly provide alternative destinations to those very investments and technology shifts. The second is to let the lesson sink in that it is possible to quite literally take a near ‘U turn’ to accommodate national interests. Ideology and moralistic bombast get you nowhere at all.
The writer is a Distinguished Fellow at the Institute of Peace and Conflict Studies, New Delhi. She tweets @kartha_tara. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.