Biden and Xi in 2012 (Chip Somodevilla/Getty Images)

If Presidents Xi and Biden have one thing in common, itâs that both desperately need a historic win. In the 23 years since Bill Clinton welcomed China into the World Trade Organization, the aura of the two nationsâ relationship has shifted from hopeful to confrontational. Skirmishes once took place outside of the public view: in cyber-attacks, satellite warfare, the cutting of subsea internet cables, and submarines playing cat-and-mouse games. But when Russia invaded Ukraine and threatened to deploy nuclear weapons, something changed.
Even China was rattled. President Xi made it clear that nuclear war was not an option. Then Hamas triggered the real possibility of a widespread ground war across the Middle East. As Biden and Xi meet in San Francisco today, everyone wants a way out.
For Xi, such geopolitical chaos is an existential risk. China is falling apart. The $18 trillion economy has tanked. The collapse of Evergrande, the nationâs property giant, exposed a simple truth. It wasnât just one huge company that had gone bust. It symbolised the loss of a dream: the Chinese no longer believe that property is a safe investment.
Meanwhile, earlier this month, foreign direct investment into China turned negative for the first time, killing any hope of rising export sales. The Belt and Road Initiative was supposed to alleviate this, bringing valuable raw materials â food, energy and data â back to China. It should have become a revenue generator, but it has turned into a system that bleeds cash. The poor emerging market nations it targeted often had to borrow money from China to cover the cost of building its physical infrastructure â and now, thanks to rising inflation and the global slowdown, they cannot pay back those loans.
All this helps explain why Xi, who is convinced the only way forward is to return to an export-led strategy, visited Chinaâs Central Bank (PBOC) a few weeks ago. It was shocking to see the nationâs leader deigning to meet lowly technocrats. Xi is unhappy with how they are portraying China; no doubt he demanded that they make the numbers prettier, even though the world lost faith in the veracity of Chinaâs numbers a long time ago. In the same vein, the arrest in September of a former PBOC boss on suspicion of corruption may have been an attempt to project control, but it hasnât worked. Xiâs internal opponents are muttering, and the Communist Party wants to get back to making money. They certainly donât want to waste Chinaâs already declining youth demographics on a senseless war with the US, the worldâs most formidable military power. Taiwan can wait.
Biden, meanwhile, has his own problems. Both Trump and Robert F. Kennedy Jr are breathing down his neck in the polls. Only 14% of Americans think that Biden has improved their standard of living. Threatening China wonât change this. Nonetheless, in recent months, he has engaged in a serious show of force by deploying aircraft carrier groups to the Pacific and the Middle East, and by revealing frightening new technologies such as the new nuclear gravity bomb. The message to China, Iran and Russia is to back off; Biden is ready to escalate.
In reality, however, the public appetite for spending money on foreign wars dropped even further once Israel stole the spotlight. It is now almost impossible for Biden to justify further funds for Ukraine, especially with President Zelenskyy refusing to hold elections, a move which killed any idea that he was fighting for democracy.
Nor can Israel expect unconditional US support. The prospect of conflict across the Middle East is splitting Jewish and young votes, both of which are critical for Bidenâs re-election chances. Since warfare is expensive as well as inflationary, a serious and historic geopolitical rapprochement would be far less costly. Now could be the moment that both the US and China agree to play nice for the sake of the world.
Such a deal might require Xi to burn both Moscow and Tehran, but they have already served their purpose. Their bullying changed the American perception of risk and brought Biden to the negotiating table with China. Putin may not be losing in Ukraine, but he faces increasing opposition at home. His position is precarious: Russia needs China, but China doesnât need Russia. The same goes for Iran. Washington is more valuable to Beijing than Moscow and Tehran combined.
Xi knows that global harmony would necessitate an armistice in Ukraine and for China and Russia to stop their support of Hamas and Hezbollah. In return, Biden understands that this will require an end to Americaâs hawkish rhetoric. Already, the seeds of this shift are being sown: when, in another highly unusual move, Xi summoned California Governor Gavin Newsom to Beijing last month, Newsom lay the groundwork for the reconciliation by saying âdivorce is not an optionâ. Given that Newsom is Bidenâs preferred successor, this change of tone was very important. China has already said it is âready to improve ties with the US at all levelsâ, and has even offered to negotiate a deal on nuclear weapons.
All of which suggests that both sides know the other cannot afford a messy divorce. The White House canât raise or cut taxes, and Beijing canât stimulate its economy either. Itâs a stalemate.
Could this be why former prime minister David Cameron has agreed to serve as the Foreign Minister of the United Kingdom? If a US-China deal is in motion, it constitutes a rare opportunity to shape and craft a new story for the world economy and a new phase of superpower relations. Would the US task the British to do the work necessary to construct this potential new order? Itâs not inconceivable, especially given the White House is distracted by its own domestic issues.
The benefits of such a âkiss-and-make-upâ photo-op would certainly be widespread. It would generate a rally in the markets and a huge sense of relief among the citizens of the world. The âmake-upâ part wouldnât even need to be that friendly. The US and China could continue to fight against each other invisibly: underwater, in space, in cyberspace and with spygames. But, as long as these battles were fought out of sight, things could get better. A cold war always beats a hot war â and kicking todayâs problems into the future seems like a fine solution for now. In a world where everyone is preparing for the worst, a note of optimism wouldnât go amiss.
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
Subscribe