According to reports, President Joe Biden and Chinese President Xi Jinping had a contentious phone call last week.
For several years, Washington has debated whether or not to decouple from Beijing. However, Biden appears to be undecided about his China policy. Meanwhile, Xi appears to have made up his mind about the degree of separation he desires between the two great powers, and he appears to be enacting it. It is past time for policymakers in the United States to get their act together.
When leaders in Beijing are unsure how to approach important issues, the Chinese Communist Party’s mouthpiece, modeled after its Soviet prototype, usually remains silent. After an unusually long period of silence during Biden’s first six months in office, Beijing appears to have decided what it wants.
The People’s Daily has increased its coverage in the last month not because there have been more developments in US-China relations, but because Beijing has a clearer game plan for exiting the bilateral relationship than the Biden administration does. The gazette published a 16-day series of articles criticizing the West for the origin of COVID-19 and praising China as a better global partner than the US, including in dealing with the virus and donating vaccines to other countries. While this rhetoric is not new, its increased visibility marks a significant departure from Beijing’s “wait and see” approach in recent months.
More importantly, Beijing’s new, far-reaching policies are already shifting its economic interests away from the United States. China’s recent crackdown on Big Tech firms, for example, is likely to be the start of Beijing’s severing of ties between its corporate darlings and Wall Street.
For years, Chinese companies listed on U.S. stock exchanges have refused to comply with the audit review process required by U.S. law because China has its own law prohibiting them from doing so. Due to the economic allure of these companies, Wall Street turned a blind eye until the Holding Foreign Companies Accountable Act, which went into effect last year, threatened to delist those that did not comply within three years. However, now that Beijing is enacting new rules prohibiting its companies from going public in the United States and establishing a new stock exchange at home to fill the void, the financial distancing between the United States and China may begin sooner than the audit tension suggests.
Foreign companies doing business with China may be forced to choose a side by Beijing. China passed an anti-foreign-sanctions law in June, threatening to retaliate against companies that comply with US and allied sanctions against China on human rights and other contentious issues. Beijing can also extend the measure from the mainland to Hong Kong. As a result, multinational corporations may have to choose between maintaining Western sanctions and maintaining access to lucrative Chinese markets.
During a recent trip to Asia, Vice President Kamala Harris stated that the United States would not force countries in the region to choose between Washington and Beijing. Perhaps, but as a result of Xi’s moves, those countries may be forced to make a choice. The perceived weakening of US overseas commitments, exacerbated by the chaotic withdrawal from Afghanistan, hasn’t helped either.
The challenge for American policymakers is to articulate their China strategy. How does an open society safeguard its liberal-democratic institutions while coexisting with a closed society that is equally powerful? The first step is to maintain the integrity of our stock markets and sanctions regime. It is our leaders’ responsibility to lay out the plan for the public.