Tag: xi jinping

CNBC Daily Open: Rate cuts might not be in the cards despite cooling inflation

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The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.

Valerie Plesch | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Downbeat Asian markets
U.S. stocks ticked up Wednesday as another report showed inflation’s cooling. Despite that, Treasury yields rose. Asia-Pacific markets, however, fell Thursday. Hong Kong’s Hang Seng Index dropped 1.26%, dragged down by Xpeng’s 3.83% decline after the Chinese electric vehicle company reported disappointing earnings results.

‘Planet Earth is big enough’
U.S. President Joe Biden met Chinese President Xi Jinping yesterday on the sidelines of the Asia-Pacific Economic Cooperation conference. Both leaders agreed to resume high-level military communications. As part of the agreement, senior U.S. military commanders will engage with their Chinese counterparts. As Xi said in his opening remarks, “Planet Earth is big enough for the two countries to succeed.”

Emptying Citi
Citigroup will start laying off workers as part of CEO Jane Fraser’s corporate overall, CNBC has learned. Citi employees who will be let go will be informed starting Wednesday U.S. time, and the process will continue until early next week, according to people with knowledge of the situation. It seems no one will be spared: chiefs of staff, managing directors and lower-level employees will all be affected.

Microsoft’s own AI chip
At its Ignite conference in Seattle, Microsoft announced two custom chips. The first, its Maia 100 artificial intelligence chip, could compete with Nvidia’s AI chips. The second, a Cobalt 100 Arm chip, is designed to tackle general computing tasks and could supplant Intel processors. But Microsoft is planning to use its chips internally, and doesn’t intend to let other companies buy those chips.

[PRO] Magnificent One
Shares of the Magnificent Seven stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — have surged this year, propelling the S&P 500 higher. They’ve also drawn criticism that their prices are too high, based on their price-to-earnings ratio. But there’s an exception: Morgan Stanley thinks one of them is “pretty inexpensive relative to free cash flow growth or earnings growth.”

The bottom line

After a very encouraging consumer price index reading on Tuesday, we have more evidence that inflation’s truly cooling.

Wholesale prices in October, as measured by the producer price index, fell 0.5% for the month against the expected 0.1% increase. That’s the biggest decline in more than three years. When producer prices fall, it takes a while for those lower prices to seep into the general consumer economy, so it’s plausible we’ll see CPI continue dropping in the months ahead.

Major U.S. indexes rose — slightly — on that encouraging news. The S&P 500 increased 0.16% and the Nasdaq Composite edged up 0.07%. The Dow Jones Industrial Average gained 0.47% for its fourth consecutive winning session.

The stock market rally over the past two days, it seems, was fueled by investors’ expectations that lower inflation readings will prompt the Federal Reserve to cut rates sooner rather than later. Investors think there’s a 29.6% chance the Fed will slash rates by a full percentage point by the end of next year, according to the CME FedWatch tool.

But that flurry of cuts is two times as aggressive as the timeline the Fed itself penciled in two months ago, noted CNBC’s Jeff Cox. And that, to put it mildly, “may be at least a tad optimistic,” Cox wrote.

Investor optimism, ironically, may be counterproductive as well. Expectations of a rate cut forced down Treasury yields Tuesday (though they rose again yesterday). Treasury yields tend to serve as the benchmark for loans and other assets, so when they drop, financial conditions loosen — exactly what the Fed doesn’t want to see.

“Financial conditions have eased considerably as markets project the end of Fed rate hikes, perhaps not the perfect underpinning for a Fed that professes to keeping rates higher for longer,” said Quincy Krosby, chief global strategist at LPL Financial.

Indeed, “this is at least the 7th time in this cycle that markets [anticipate] … a potential dovish pivot,” wrote Deutsche Bank macro strategist Henry Allen. (Spoiler alert: Investors have, without exception, been disappointed the previous times as the Fed refused to budge.)

In short: While it’s undeniable inflation’s dropping, there’s no guarantee rates will fall in tandem. It might be better to be pleasantly surprised than to be disappointed.

— CNBC’s Jeff Cox contributed to this report.

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November 15, 2023
U.S. and China agree to resume military talks. Takeaways from the Biden-Xi summit

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U.S. President Joe Biden and Chinese President Xi Jinping agreed to resume high-level military communication when they met in person Wednesday for the first time in a year in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.

Brendan Smialowski | Afp | Getty Images

BEIJING — U.S. President Joe Biden and Chinese President Xi Jinping have agreed to resume high-level military communication, according to both countries.

The two leaders met in person for the first time in a year Wednesday local time in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.

“We’re back to direct, open, clear communications,” Biden said at a press conference after the talks.

China has conducted military exercises around Taiwan, while its navy has been engaging in aggressive maneuvers in the South China Sea in a standoff with the Philippines as both countries stake their territorial claims.

The U.S. has wanted to revive the military communication, especially after some near-miss incidents where China’s ships almost collided with American forces.

“Vital miscalculations on either side can cause real trouble with a country like China or any other major country,” Biden said at the post-meeting press briefing.

China’s Defense Ministry declined a call with its U.S. counterpart in early February after the discovery of an alleged Chinese spy balloon over U.S. airspace. The balloon incident delayed U.S. Secretary of State Antony Blinken’s highly anticipated trip to China by more than four months.

In June, the defense chiefs from both countries attended an annual security summit in Singapore, but they did not have a formal meeting.

When Blinken finally visited China, he said he “repeatedly” raised the need for direct communication between the two countries’ militaries but failed to revive such talks.

China has yet to name a defense minister after dismissing Gen. Li Shangfu from the position without explanation in late October.

U.S. Secretary of Defense Lloyd Austin will meet with his Chinese counterpart when the Chinese defense chief is selected, a senior Biden administration official told reporters after the Biden-Xi summit.

Read more about China from CNBC Pro

As part of the agreement, senior U.S. military commanders including that of Pacific forces in Hawaii will engage with their Chinese counterparts, the official said.

The two countries also plan to establish ways for ship drivers and others to discuss incidents and, potentially, best practices, the official said.

A readout published by Chinese state media added the resumption of such military talks was “on the basis of equality and respect,” according to a CNBC translation.

Taiwan

At the presser, Biden reiterated the U.S. position that Taiwan maintains its sovereignty, despite China’s claims to the contrary.

“We maintain the agreement that there is a One-China policy and I’m not going to change that, that’s not going to change. That’s about the extent to which we discussed,” he said.

According to Chinese state media, Xi pointed out during the bilateral meeting that Taiwan has always been the “most important and sensitive” issue in China’s relations with the U.S.. He said in the report that China “takes seriously” positive statements the U.S. made during his meeting with Biden last year in Indonesia.

“The U.S. should use concrete actions to reflect its stance of not supporting ‘Taiwan independence,’ stop arming Taiwan and support China’s peaceful reunification,” state media reported. “China will ultimately be reunified and will inevitably be reunified.”

Beijing considers Taiwan part of its territory, with no right to independently conduct diplomatic relations. The U.S. recognizes Beijing as the sole government of China but maintains unofficial relations with Taiwan, a democratically self-governed island.

AI, fentanyl and more

Chinese state media also said the two sides agreed to establish an intergovernmental dialogue on artificial intelligence, set up a working group on drug control, “significantly” increase flights between the two countries next year and expand exchanges in areas such as education, business and culture.

The U.S. senior administration official said the Chinese were already taking action on nearly 24 companies that make precursors for fentanyl — an addictive drug that’s led to overdoses and deaths in the U.S.

Biden said at the post-meeting presser that the two leaders agreed that fentanyl production needs to be “curbed substantially.”

On artificial intelligence, however, the official said it was too early for a joint declaration by the two leaders, and noted the need to prevent the incorrect use of AI in military or nuclear operations.

Trade and sanctions

The Biden administration has announced export controls and sanctions on Chinese companies in an effort to limit U.S. companies’ contribution to technology that supports China’s military.

Xi noted the export controls, investment reviews and sanctions in the meeting, and called for the U.S. to lift the sanctions and provide a non-discriminatory environment for Chinese companies, Chinese state media said.

Biden also brought up difficulties around travel harassment of Americans in China, and a business environment that wasn’t as welcoming as it was in the past, the U.S. senior administration official said.

But overall the official described the meeting as more personal than the last time the two leaders met.

In a post on X, formerly known as Twitter, Biden called his day of meetings with Xi “some of the most constructive and productive discussions we’ve had.”

“We built on groundwork laid over the past several months of diplomacy between our countries and made important progress.”

— CNBC’s Christina Wilkie and Clement Tan contributed to this report.

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November 15, 2023
CNBC Daily Open: Despite cool inflation, don’t expect rate cuts

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The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.

Valerie Plesch| Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Back in the green
U.S. stocks ticked up Wednesday as another report showed inflation’s cooling. Despite that, Treasury yields rose. The pan-European Stoxx 600 index added 0.42%. Britain’s FTSE 100 climbed 0.62%, on encouraging inflation news in the U.K., to turn positive for the year. Separately, Siemens Energy jumped 8.78% after securing guarantees from the German government.

More good news on inflation
U.K.’s consumer price index plunged from 6.7% in September to 4.6% in October on an annual basis, though it remained the same month on month. Both figures were below economists’ estimates. Core CPI, which excludes food, energy, alcohol and tobacco prices, rose 5.7% for the year. With those numbers, it’s likely the Bank of England will continue leaving interest rates unchanged.

‘Planet Earth is big enough’
U.S. President Joe Biden met Chinese President Xi Jinping yesterday on the sidelines of the Asia-Pacific Economic Cooperation conference. The two leaders struck a conciliatory tone at the start of the summit. “We have to ensure that competition does not veer into conflict,” Biden said. And Xi, in his opening remarks, said, “Planet Earth is big enough for the two countries to succeed.”

AT1 bond demand ‘a signal’
UBS began selling additional tier one bonds last week. AT1 bonds were wiped out when UBS was forced to take over Credit Suisse earlier this year, causing controversy among bondholders. Still, there was “incredible” market demand for them, said CEO Sergio Ermotti, which “is a signal to the Swiss financial system” that confidence is being restored.

[PRO] Where will cash go?
With the high interest rates and bond yields in recent months, money market funds and Treasurys have attracted investors’ cash, sucking them away from stocks. But with October’s CPI coming in so cool that analysts are comfortable declaring a soft landing, stocks have begun rallying again. What, then, happens to all the cash parked in those funds?

The bottom line

After a very encouraging consumer price index reading on Tuesday, we have more evidence that inflation’s truly cooling.

Wholesale prices in October, as measured by the producer price index, fell 0.5% for the month against the expected 0.1% increase. That’s the biggest decline in more than three years. When producer prices fall, it takes a while for those lower prices to seep into the general consumer economy, so it’s plausible we’ll see CPI continue dropping in the months ahead.

Major U.S. indexes rose — slightly — on that encouraging news. The S&P 500 increased 0.16% and the Nasdaq Composite edged up 0.07%. The Dow Jones Industrial Average gained 0.47% for its fourth consecutive winning session.

The stock market rally over the past two days, it seems, was fueled by investors’ expectations that lower inflation readings will prompt the Federal Reserve to cut rates sooner rather than later. Investors think there’s a 31% chance the Fed will slash rates by a full percentage point by the end of next year, according to the CME FedWatch tool.

But that flurry of cuts is two times as aggressive as the timeline the Fed itself penciled in two months ago, noted CNBC’s Jeff Cox. And that, to put it mildly, “may be at least a tad optimistic,” Cox wrote.

Investor optimism, ironically, may be counterproductive as well. Expectations of a rate cut forced down Treasury yields Tuesday (though they rose again yesterday). Treasury yields tend to serve as the benchmark for loans and other assets, so when they drop, financial conditions loosen — exactly what the Fed doesn’t want to see.

“Financial conditions have eased considerably as markets project the end of Fed rate hikes, perhaps not the perfect underpinning for a Fed that professes to keeping rates higher for longer,” said Quincy Krosby, chief global strategist at LPL Financial.

Indeed, “this is at least the 7th time in this cycle that markets [anticipate] … a potential dovish pivot,” wrote Deutsche Bank macro strategist Henry Allen. (Spoiler alert: Investors have, without exception, been disappointed the previous times as the Fed refused to budge.)

In short: While it’s undeniable inflation’s dropping, there’s no guarantee rates will fall in tandem. It might be better to be pleasantly surprised than to be disappointed.

— CNBC’s Jeff Cox contributed to this report.

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November 15, 2023
Why a group of ‘everyday people’ in Iowa have been invited to dinner by Chinese president Xi Jinping: ‘We’re eager to meet with him’

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A group of Chinese President Xi Jinping’s “old friends” from Iowa have been invited to a dinner he will attend in California next week — 38 years after they welcomed the then-unknown party official for a hog roast, farm tours and a Mississippi River boat ride as they showed him how capitalists do agriculture.

“This has been a heck of a journey — we can’t figure it out. We don’t even know why he likes us!” said Sarah Lande, an 85-year-old Muscatine resident who has maintained connections with Xi since he made his first visit to the US as the leader of a food processing delegation from China’s Hebei Province in 1985.

“But we’re eager to meet with him, too. We’re regular, everyday people,” Lande added.

Xi’s warm and enduring bond with the Midwesterners he first encountered nearly four decades ago stands in contrast with the suspicions and acrimony that have characterized relations between the two largest economies over the last few years.

Both Xi and President Joe Biden, who plan to meet Wednesday during the Asia-Pacific Economic Cooperation summit in San Francisco, have taken recent diplomatic steps to ease the strains.

The Iowans’ invitations for the reception and dinner, on the sidelines of APEC, came through the the National Committee on US-China Relations and the US-China Business Council, in coordination with China’s embassy, Lande said.

The Iowans haven’t been told if they’ll get a private audience with Xi, who was 31 when they met him.

Terry Branstad, a former Iowa governor and US ambassador to China, has also been invited, according to an aide.

In 1985, Gary Dvorchak’s parents gave Xi his bedroom, decorated with Star Trek items, in their Muscatine home. Dvorchak and his sister Paula, who talked to the future Chinese leader about American movies, are on next week’s guest list.

So is Luca Berrone, then an Iowa economic development official, who drove Xi around to company sites including Monsanto Co., Cargill Inc. and Quaker Oats, grain and livestock farms, the Amana Colonies — a religious community known for its farming heritage and communal living — and Iowa State University in Ames.

“He wanted to learn how to feed his people,” Lande said in a telephone interview. Xi had read Mark Twain “and he really wanted to see the Mississippi,” she said. She hosted him for a potluck at her home overlooking the river.

Berrone’s stops with the four-member delegation and their interpreter included a farm in Coggon, a spot where Twain had hidden manuscripts in a wall. Berrone arranged hotels as well as home stays where none were available.

“We had a really good time in two weeks,” he said. “We were like the road movie — five or six guys on a road trip.”

‘You Are America’

The Iowans made an impression on Xi, said Ken Quinn, the former president of the World Food Prize Foundation, who is planning to attend the Bay Area dinner.

“He was not anyone special and the friendship they showed him touched him personally,” said Quinn, who met Xi’s father, Xi Zhongxun, an architect of China’s economic opening, when he himself traveled to Iowa in 1980.

When Xi Jinping returned to the United States in 2012, as vice president and about to ascend to the presidency, he gathered with the “old friends” in Lande’s Muscatine home again. “He said, ‘You were the first people I met in America, and to me, you are America,’” she said.

That year, Xi invited more than a dozen of the Iowans to China, and “they had the whole thing set up in two months,” Lande said. “He was the top-down boss and he made it happen.”

Xi and his wife, Peng Liyuan — a famous Chinese folk singer in her own right — threw a banquet for them. “She said, ‘Well, I just had to meet the people from Iowa,’” Lande recalled. “By the way, she is a lovely, beautiful lady. Her last remark was, ‘If we ever retire, I’m going to gather my daughter and we’re coming to Muscatine.’”

China’s embassy in Washington and the dinner’s organizers didn’t respond to requests for comment on Friday night.

The reunion aside, Iowa, a major soybeans and corn producer, has an interest in better relations between Washington and Beijing.

This week, China, a top soybean importer, bought more than 3 million metric tons of the commodity from the US, a volume that surprised the market. China had been buying cheaper Brazilian supplies and the move is a goodwill gesture ahead of the Biden-Xi talks, according to people familiar with the matter who asked not to be named discussing governmental decisions.

Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up before it launches Nov. 29.

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November 11, 2023
Biden And Xi Jinping Are Set To Meet Next Week At Summit In S.F. Bay Area

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WASHINGTON (AP) — When President Joe Biden meets Chinese leader Xi Jinping on Wednesday, there will be no such thing as a small detail.

How they greet? If they eat? Where they sit? Will there be flowers? Bottled water or in a glass? “Pretty intense,” senior administration officials say of navigating delicate protocols.

Any encounter involving the president and a foreign leader means managing tricky logistics, political and cultural, and every occurrence or utterance can potentially jolt the world order. But few nations are more attuned to etiquette than the Chinese, and the often-conflicting interests between Washington and Beijing might mean the seemingly trivial becomes meaningful.

There’s probably “very detailed planning of the actual choreography of who enters a room where, if there will be pictures taken and all of that,” said Bonny Lin, senior fellow for Asian security and director of the China Power Project at the Center for Strategic and International Studies.

Biden and Xi will meet while both attending next week’s Asia-Pacific Economic Cooperation summit in San Francisco. So far, even basic information has remained closely guarded. Statements Friday by China’s government didn’t mention the day or location. The White House, citing security concerns, says only that the meeting will be held “in the Bay area.

FILE – President Joe Biden and Chinese President Xi Jinping shake hands before their meeting on the sidelines of the G20 summit meeting, Nov. 14, 2022, in Nusa Dua, in Bali, Indonesia. (AP Photo/Alex Brandon, File)

That could only increase the pressure as both sides potentially haggle over everything from meeting time and length to who enters the room first. Will they use a table or easy chairs? What about security presence and interpreter access?

Then there is the more obviously substantive: Will there be a joint statement after the meeting and how much of the session will be in public view?

The plan is to set aside enough time for in-depth conversations on issues that will be divided into different sessions, senior administration officials say. That recalls Biden’s nearly three-hour meeting with Xi before the start of last year’s G-20 summit in Bali.

The officials also noted that this will be Xi’s first trip to the United States in six years, and his first to San Francisco since he was a provincial Communist Party secretary.

Victor Cha, former director for Asian Affairs on the White House’s National Security Council, said organizing such meetings at APEC is easier than at a formal location. But, he said, hammering out talks on summit sidelines is still “a logistics nightmare.”

“China, normally, if they come to United States, they want everything. They want all the pomp and circumstance. They want the highest possible respect that can be paid to them,” Cha said. “That is politically not possible. And so, having APEC in San Francisco solves that problem in the sense that it’s not the official White House that’s hosting the meeting.”

President Joe Biden, left, is seated with Chinese President Xi Jinping, right, for a meeting on the sidelines of the G20 summit meeting, Nov. 14, 2022, in Bali, Indonesia. (AP Photo/Alex Brandon)

Even informal settings can bring high stakes.

When President Richard Nixon visited China in 1972, aiming to ease decades of animosity, he brought a new pair of shoes with rubber soles to climb the Great Wall.

President Barack Obama and Xi didn’t wear ties during their 2013 meeting at Sunnylands, a modernist mansion in Rancho Mirage near Palm Springs, California. It was news then that Obama stayed overnight there while the Chinese delegation returned to a nearby hotel.

President Donald Trump and Xi wore dark suits for dinner at Trump’s Mar-a-Lago estate in Florida four years later. The meal featured what Trump called “the most beautiful piece of chocolate cake.”

Bonnie Glaser, managing director of the Indo-Pacific program at the German Marshall Fund, said that, for the upcoming meeting, Xi’s team likely pushed for a venue away from the APEC site and talks lasting longer than those in Bali.

“The Chinese want a separate summit,” she said.

The Chinese attach importance to the location, which this time may be more like Sunnylands than Anchorage, Alaska, where top U.S. and Chinese officials held rather tense 2021 talks. Chinese state media might fixate on the weather as a barometer for bilateral relations. Early forecasts are calling for rain with a high in the mid-60s for San Francisco.

Even on-site flowers could be important, as certain choices can symbolize harmony in Chinese culture. Plum blossom is a well-liked flower known in China for persevering amid harshness, while lotuses convey peace in the Chinese language. Chrysanthemums, by contrast, are associated with death.

Xi may expect Biden to greet him upon arrival. Xi’s team could also want the leaders photographed together without staff to convey a personal relationship.

“Chinese officials will want to project to their domestic audience that Xi is received by Biden with dignity and respect,” said Ryan Hass, director of the John L. Thornton China Center at the Brookings Institute. He suggested that required “imagery of both leaders interacting on a personal basis, beyond the customary handshake in front of a bank of flags in a hotel conference room.”

That could be as simple as a short walk together, Hass said. The Chinese also tend to emphasize food and might push for a meal.

During Nixon’s 1971 visit, a military honor guard greeted him at the airport, but the much-watched series of toasts from both sides came later, only after a shark fin banquet dish was served. China offered a Texas-style barbecue at a luxury Beijing hotel to fete President George H.W. Bush in 1989, but blocked his invitation of Fang Lizhi, then the country’s best-known dissident.

The APEC setting precludes a formal dinner. But lunch is possible. That’s despite Xi scheduling his trips down to the minute and often packing in so much that there’s no time to eat, according to a documentary on its diplomatic principles China released in 2017.

Both sides also always have security concerns. Obama wrote in his memoir of his 2009 China trip that his team was “instructed to leave any non-governmental electronic devices on the plane” and to operate assuming “that our communications were being monitored” and hotel rooms had hidden cameras.

Hillary Clinton’s 1995 Beijing visit as first lady turned heads for a different reason when she declared that “human rights are women’s rights, and women’s rights are human rights.” So did then-first lady Laura Bush’s 2008 trip to the Olympics in Beijing after she stopped in Thailand and visited a refugee camp for people fleeing the government of China-backed Myanmar.

But protocols around U.S.-China leader interactions don’t always have to address espionage threats or human rights matters.

Obama’s daughter Sasha was 9 and studying Mandarin in school when she practiced a few phrases during a 2011 White House welcome ceremony for Chinese President Hu Jintao. When she and her sister Malia visited China with their mother, Michelle, on a goodwill tour three years later, the Chinese press dubbed the then-first lady “Mrs. Diplomatic.”

That trip featured a toboggan ride away from the press after a Great Wall visit, and a game of table tennis where Michelle Obama joked that her husband played the game and “thinks he’s better than he really is.” Yet what unfolded felt stiff to some. The write-up in The New York Times carried the headline: “Even With Ping-Pong, a Formal Meeting in China.”

Associated Press writer Colleen Long contributed to this report.

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November 11, 2023
Biden to meet with Chinese President Xi Jinping Nov. 15 in San Francisco Bay area

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President Biden will meet with Chinese President Xi Jinping next Wednesday, on Nov. 15, in the San Francisco Bay area, the White House announced Friday. The president and the U.S. will work on reopening important military communications channels that have been cut off, managing competition and addressing security issues.

White House press secretary Karine Jean-Pierre said in a statement that Mr. Biden and Xi “will discuss issues in the U.S.-[People’s Republic of China] bilateral relationship, the continued importance of maintaining open lines of communication, and a range of regional and global issues.”

Following their last meeting in Bali, Indonesia, in November 2022, Jean-Pierre said the two “will also discuss how the United States and [China] can continue to responsibly manage competition and work together where our interests align, particularly on transnational challenges that affect the international community.”

This will be the two leaders’ seventh interaction during Mr. Biden’s presidency and the pair’s second in-person meeting. In a briefing with reporters, senior administration officials said the U.S. realizes the increased tensions between the U.S. and China have altered their relationship and shifted key priorities for the meeting of the two presidents.

“This is not the relationship of five or 10 years ago — we’re not talking about a long list of outcomes or deliverables. The goals here really are about managing the competition, preventing the downside of risk of conflict and ensuring channels of communication are open,” one official said.

“We’re clear-eyed about this,” another official said. “We know efforts to shape or reform China over several decades have failed, but we expect China to be around and to be a major player on the world stage for the rest of our lifetimes.”

The most pressing issue is the ongoing silence between the two nations’ militaries that has lasted over a year, after China cut off military communication following then-Speaker Nancy Pelosi’s visit to Taiwan in August 2022.

Mr. Biden is “determined” to take steps to restore the crucial communication, U.S. officials said, noting however, the Chinese remain “reluctant” to do so.

The American officials said U.S. diplomats have raised the importance of re-establishing this dialogue in “nearly every conversation” that U.S. officials have had with their Chinese counterparts over the past year, but without success.

Another sticking point delaying the restoration of military-to-military communication is the subject of the Chinese spy balloon shot down by a U.S. fighter jet in February, which “comes up often” in discussions about the military silence, one official said.

“I think the balloon episode underscored the difficulty we had at the time to be able to establish high-level, consequential communications with Beijing. And we’ve made that case persistently and consistently,” the official added.

Mr. Biden and the U.S. will also address several “contentious” international and regional issues with China.

Citing China’s “burgeoning relationship” with Iran, Mr. Biden is expected to “underscore” that it is “essential that Iran not seek to escalate or spread violence in the Middle East, and to warn quite clearly that if Iran undertakes provocative actions anywhere, that the United States is prepared to respond and respond promptly,” one of the officials explained.

The U.S. and Taiwan are each holding presidential elections next year, which one official warned “could make this quite a bumpy year.” The U.S. is expected to underscore concerns about a “ramping up of military activities around Taiwan,” one senior official said, describing the current aggression as “unprecedented,” “dangerous” and “provocative.”

The president and his team also plan to address Chinese-made fentanyl, artificial intelligence, and U.S. detainees in China, and they’re also expected to warn China about operating election influence operations in the U.S. elections again.

As they discuss this wide range of issues, the U.S. officials said they will be assessing whether China truly wants to improve relations with the U.S. or if the diplomacy next week is mainly for its own “tactical” and “short-term measures.”

“We’re going to interrogate those assumptions closely and clearly,” the official added.

Xi is supposed to formally announce on Friday his intention to attend the Asia-Pacific Economic Cooperation summit in San Francisco next week, which will serve as the backdrop for the Biden-Xi meeting.

Mr. Biden frequently notes his personal relationship with Xi, forged over 12 years now, after the two men met when both were vice presidents.

This is Xi’s first trip to the U.S. in six years. He also traveled to California a decade ago, for a summit in Rancho Mirage with President Obama in 2013, months after he assumed the presidency from Hu Jintao.

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Bo Erickson

Bo Erickson is a reporter covering the White House for CBS News Digital.

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November 10, 2023
Deal over dim sum: China caves to EU on data to keep investors sweet

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Voiced by artificial intelligence.

BRUSSELS — When EU digital chief Věra Jourová sat down in Beijing with a senior Chinese official in September, her complaint list was as long as the 11-course dinner her host had prepared.

Sore points included Beijing’s disinformation campaigns, electoral interference, state control over Artificial Intelligence development, and ties with Russia.

Predictably, Jourová didn’t get many straight answers from her counterpart, Vice Premier Zhang Guoqing. It’s a nail-biting time to be a politician in China, as major figures such as Qin Gang and Li Shangfu have recently been purged as foreign and defense ministers, and no one wants to be accused of making big concessions to the West.

Then, in a sudden surprise initiative, Zhang said he was ready to offer a goodie to European businesses facing an increasingly hostile political environment in President Xi Jinping’s China. He explained Beijing was willing to move on data flows — a sphere where China has been trying to curb the ability of foreign companies to export data generated within the country. All that data is a goldmine for European business, but China guards it zealously.

A deal on data flows was a big call from Zhang, but can be explained by China’s growing fears about its precarious economy. While security is front-and-center to Chinese policymakers, they also know they have to offer some big carrots to keep foreign investors onside.

“You could feel that something clicked on the spot,” said an EU official with knowledge of the discussion, recalling the heated debates on data over Chinese delicacies like beef in lotus leaves and dim sum.

Although the dinner happened in September, three officials with knowledge of China’s switching tack have only now explained how the change of heart in Beijing came about.

“The vice-premier told her he understood the proposal makes sense, and asked the relevant authorities to take the matter forward,” the first official said. Zhang immediately turned to his junior colleagues from the Cyberspace Administration of China and the Ministry of Industry and Information Technology. “You had a feeling that that was the moment the big guy gave the go-ahead.”

According to another official, when Trade Commissioner Valdis Dombrovskis visited Beijing shortly after Jourová, he received the final confirmation of the changes to the data laws from his counterpart, Vice Premier He Lifeng, an influential economic aide to President Xi Jinping.

Shortly afterward, China agreed to reverse the burden of proof under the relevant laws, allowing most data stored in China to be transferred out of the country unless expressly excluded by the authorities. EU officials, though, cautioned that they’ll still wait to see how Chinese authorities at all levels implement the new provision.

Special gift to Europe

Even though U.S., Japanese and other companies had also been pushing for this kind of measure from Beijing on data, China offered the diplomatic win to the EU.

The European Union Chamber of Commerce, among the first to be notified when Beijing made the legal revision, sent Jourová a congratulatory letter, seen by POLITICO.

China’s Vice Premier Zhang Guoqing | Lintao Zhang/Getty Images

“Make no mistake, China is merely fixing a problem of its own making,” the second official noted. “It’s not an act of benevolence. It’s an act of self-correction.”

Still, that self-correction is far from a given under a nationalistic government facing stiff competition from the U.S.

Increasingly, China’s uncompromising ideological focus is forcing many companies to adjust their business strategies, including by taking their new investments out of China. Indeed, the EU and the rest of the G7 rich democracies are calling on their companies to “de-risk,” as Russia’s war against Ukraine prompts concerns about a possible Chinese invasion of Taiwan.

According to a report issued Wednesday by Penta, a business research group, one in five EU policymakers considers China to be the most pressing issue facing the bloc — while only 16 percent of people say they’re open to working with companies from China, bottom of the list.

It’s against this backdrop that Beijing wants — and needs — to throw some bones to the EU.

“For sure there’s a lot of self-interest for China [to give EU the data deal], where there’s a sharp drop of foreign direct investment which China desperately needs,” the first official said.

European Council President Charles Michel and European Commission President Ursula von der Leyen | Kenzo Tribouillard/AFP via Getty Images

Over the past three months, Beijing has welcomed a long line of EU officials in a thaw from the 2021 low point where China’s sanctions on EU politicians and intellectuals were followed by an indefinite freeze of a massive EU-China trade deal, which remains unratified.

Commission President Ursula von der Leyen and her European Council counterpart Charles Michel are expected to attend an EU-China Summit in December and meet Chinese President Xi Jinping.

EU officials should use China’s underperforming economy — most specifically in the real estate sector — as leverage, according to Luisa Santos, deputy director of BusinessEurope, a Brussels-based lobby group, who is currently visiting China.

Speaking before her trip, Santos described the Chinese economy as “not in a great situation,” adding that EU officials should seize this opportunity to convince Beijing to open up further.

“China needs to recognize that what is happening in our bilateral relationship is something that is not sustainable,” she said.

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Stuart Lau

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November 9, 2023
WSJ News Exclusive | Xi Jinping Is Looking for Someone to Blame for China’s Property Bust

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Updated Oct. 26, 2023 12:05 am ET

With China’s property bust threatening to sink the country’s economic recovery, Xi Jinping is looking for someone to blame.

After putting the billionaire founder of Evergrande, a heavily indebted property firm, under investigation for possible crimes, Beijing is expanding its probes to include bankers and financial institutions that facilitated developers’ risky behavior, people familiar with the matter say.

Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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October 25, 2023
China replaces defense minister, out of public view for 2 months, with little explanation

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China has replaced Defense Minister Gen. Li Shangfu, who has been out of public view for almost two months with little explanation, state media reported Tuesday.

Li is the second senior Chinese official to disappear this year, following former Foreign Minister Qin Gang, who was removed from office in July with no explanation offered.

Li, who became defense minister during a Cabinet reshuffle in March, hasn’t been seen since giving a speech on Aug. 29. There is no indication that the disappearances of Qin and Li signal a change in China’s foreign or defense policies, although they have raised questions about the resilience of president and ruling Communist Party leader Xi Jinping’s circle of power.

File photo: Chinese Defense Minister Li Shangfu salutes before delivering a speech in Singapore, on June 4, 2023.

Vincent Thian / AP

Xi has a reputation for valuing loyalty above all and has relentlessly attacked corruption in public and private, sometimes in what has been seen as a method of eliminating political rivals and shoring up his political position amid a deteriorating economy and rising tensions with the U.S. over trade, technology and Taiwan.

Li is under U.S. sanctions related to his overseeing weapon purchases from Russia that bar him from entering the country. China has since cut off contacts with the U.S. military, mainly in protest over U.S. arm sales to Taiwan, but also strongly implying that Washington must lift the measures against Li, which Beijing refuses to publicly recognize.

The announcement from state broadcaster CCTV said that both Li and Qin had been removed from the State Council, China’s Cabinet and the center of government power. That virtually assures the end of their political careers, although it remains unclear whether they will face prosecution or other legal sanctions.

China’s political and legal systems remain highly opaque, fueling lively discussion of possible corruption, personal foibles or fallings-out with other powerful figures leading to the downfall of top officials.

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October 24, 2023
China deploys six warships to Middle East as tensions in region boil over Israel

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SIX Chinese warships have been deployed to the Middle East as tensions boil over Israel, reports claim.

China‘s 44th naval escort task force has been involved in routine operations in the area, and spent several days on a visit to Oman last week.

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China deployed six warships, which have been operating in the Middle East amid tensions in IsraelCredit: AFP

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Chinese leader Xi Jinping called for a two-state solution to the Israel-Hamas warCredit: Reuters

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The country’s 44th naval escort task force spent several days on a visit to OmanCredit: Alamy

The task force – from the People’s Liberation Army Eastern Theatre – left Muscat for an unspecified location on Saturday after taking part in a joint exercise with the Omani navy.

It includes the Zibo, a Type 052D guided-missile destroyer, the frigate Jingzhou and the integrated supply ship Qiandaohu – all stationed in the Middle East at a time of heightened tensions.

During the visit, Chinese commanders met Omani military officials and visited military institutions, while sailors from both countries toured each other’s shops.

They also organised a basketball game, according to state news agency Xinhua.

The PLA task force has been involved in escort missions for shipping since arriving in the Gulf of Aden north of Somalia six months ago.

But it handed over its mission to the 45th escort task force earlier this month.

The new convoy, from the PLA’s Northern Theatre command, includes a Type 052 destroyer Urumqi, the frigate Linyi and a supply ship Dongpinghu.

On Thursday, Chinese leader Xi Jinping said a two-state solution to establish an independent Palestine is the “fundamental way out” of the Israel-Hamas war.

“The top priority now is a ceasefire as soon as possible, to avoid the conflict from expanding or even spiraling out of control and causing a serious humanitarian crisis,” Xi was quoted as saying by China’s state-broadcaster CCTV.

It comes after the US has been sending off a powerful arsenal to the Middle East, as Israel‘s war against Hamas deepens.

The American military is increasing its firepower in the region, looking to prevent Iran and other Iran-backed groups from getting involved in the conflict.

The US empire of steel includes a network of bases in the Middle East with 2,000 troops, 2,400 Marines, and 13 warships now on alert.

A few A-10 Warthog and F-15E attack planes arrived in the region last week, with more advanced military aircraft expected to join.

The Pentagon is also rushing air defences and munitions to Israel, as well as an aircraft carrier monster fleet to the eastern Mediterranean, Reuters reports.

Another carrier is also set to be sent to the region in the coming days.

The United States has also told some 2,000 troops to be ready to deploy within 24 hours if notified – instead of the usual 96 hours – and could include units that provide assistance like medical aid if needed, a US official said on Monday.

Washington says the moves are meant as a deterrent, not a provocation.

On Friday, a US Navy warship fired what are believed to be America’s first shots in defence of Israel near the Red Sea coast of Yemen.

An official said the USS Carney shot down 15 drones and four cruise missiles fired by Iran-backed Houthi rebels in a nine-hour onslaught.

It comes as every big gun is pointed towards Gaza, with the world holding its breath for Israel’s imminent invasion of its Hamas enemy’s stronghold.

And humanitarian aid has begun to flow into Gaza after the border crossing with Egypt was opened, providing a “lifeline” for those suffering in the enclave.

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The Chinese task force had been conducting operations in the Middle East since MayCredit: Reuters

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Juliana Cruz Lima

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October 21, 2023
Global divisions deepen amid Israel-Hamas war

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Global divisions deepen amid Israel-Hamas war – CBS News

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While President Biden has affirmed U.S. support for Israel, Russia and China have called for a cease-fire. Steve Inskeep, host of NPR’s “Morning Edition,” joins CBS News to discuss what we can learn from Abraham Lincoln’s presidency about today’s divisions.

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October 19, 2023
CNBC Daily Open: Consumers in U.S. and China are powering their economies

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Young customers buy second-hand luxury goods at a shopping mall in Shanghai, China, October 10, 2023.

CFOTO | Future Publishing | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

The bottom line

U.S. markets wavered Tuesday as investors digested September’s U.S. retail sales report and third-quarter earnings from banks.

Consumers spent much more last month than economist had expected, which “puts us on track for a strong GDP number later this month,” said David Russell of TradeStation, an online trading and brokerage firm. Following the retail report, Goldman Sachs boosted its forecast for third-quarter gross domestic product by 0.3 percentage points to 4%. That’d be the highest quarterly growth since the last quarter of 2021.

It’s not just U.S. consumers who are splurging. Retail sales in China also jumped more than expected in September, buoying the country’s third-quarter GDP growth. China’s economy might finally be stabilizing, giving it a foundation on which to meet — or even exceed — Beijing’s target of about 5% economic growth this year. A resurgent China will boost global economic growth, but might raise new fears about inflation on renewed demand from the country.

Indeed, the specter of high inflation and, correspondingly, higher-for-longer interest rates, haunted the retail report, at least for the U.S. The hot spending data “gives the Fed zero reason to loosen policy, which keeps the 10-year Treasury yield pushing toward 5%,” said Russell.

Treasury yields jumped yesterday to multiyear highs, pressurizing stocks despite a good start to earnings season. (Of the companies that have reported so far, 83% have surpassed earnings estimates.)

Major U.S. indexes made hesitant moves in both directions. The S&P 500 slipped a miniscule 0.01%, the Nasdaq Composite lost 0.25% while the Dow Jones Industrial Average eked out the merest gain of 0.04%.

If bond yields continue rising, it’s possible earnings reports might not have a big effect on the overall stock market. As Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance, put it, “It’s more the bond market driving the stock market at this point.”

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October 17, 2023
Pentagon releases videos of

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Pentagon releases videos of “coercive and risky” behavior by Chinese jets toward U.S. planes – CBS News

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The Pentagon declassified videos of Chinese jets performing what it said were “coercive and risky” maneuvers toward U.S. military jets over international waters.

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October 17, 2023
The smiling face of Chinese interests in the Indo-Pacific: David Cameron

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LONDON — It is a multi-billion-dollar plan to build a metropolis in the Indo-Pacific which critics fear may one day act as a Chinese military outpost.

Now the vast Colombo Port City project has a new champion — former British Prime Minister David Cameron.

Cameron has been enlisted to drum up foreign investment in the controversial Sri Lankan project, which is a major part of Xi Jinping’s Belt and Road Initiative — China’s global infrastructure strategy — and is billed as a Chinese-funded rival to Singapore and Dubai.

Cameron flew to the Middle East in late September to speak at two glitzy investment events for Colombo Port City, having visited the waterside site in Sri Lanka in person earlier this year.

His spokesperson said the former PM had had no direct contact with either the Chinese government or the Chinese firm involved. But Cameron’s lobbying for the scheme has drawn severe backlash from critics, who say his activities will aid China in its geopolitical ambitions.

Former Conservative Party leader Iain Duncan Smith, who was sanctioned by Beijing for criticizing its human rights record, said: “Cameron of all people must realize that China’s Belt and Road is not about help and support and development, it’s ultimately about gaining control — as they’ve already demonstrated in Sri Lanka.

“I hope that he will reconsider the position he’s taken on this.”

Tim Loughton, another Tory MP sanctioned by China, said: “The Sri Lankan project is a classic example of how China buys votes and influence in developing countries and then sends the bailiffs in when those countries can’t keep up the payments.”

“Cameron should be working to help wean vulnerable countries off Chinese influence and debt rather than tying them in more tightly.”

At the roadshow

Dilum Amunugama, Sri Lanka’s investment minister who attended the investment events in the UAE last month, told POLITICO he believed Cameron was enlisted to convince Western investors to put their money into the project.

Amunugama was at two events where Cameron spoke — one in Abu Dhabi with an audience of 100, and one in Dubai with an audience of 300.

“The main point he [Cameron] was trying to stress is that it is not a purely Chinese project, it is a Sri Lankan-owned project — and that is the main point I think the Chinese also wanted him to iron out,” Amunugama said.

Cameron is in charge of drumming up investment into the Chinese-funded Colombo Port City project | Ishara S. Kodikara/AFP via Getty Images

The Sri Lankan minister said the decision to enlist Cameron “was taken by the Chinese company, not the government.”

Cameron’s office said his involvement was organized by the Washington Speakers Bureau, a D.C.-based agency that books guest speakers for corporate events.

His spokesperson said: “David Cameron spoke at two events in the UAE organized via Washington Speakers Bureau (WSB), in support of Port City Colombo, Sri Lanka.

“The contracting party for the events was KPMG Sri Lanka and Mr Cameron’s engagement followed a meeting he had with Sri Lanka’s president, Ranil Wickremesinghe, earlier in the year.

“Mr Cameron has not engaged in any way with China or any Chinese company about these speaking events. The Port City project is fully supported by the Sri Lankan government,” his spokesperson added.

The spokesperson declined to say how much Cameron was paid for his time. Cameron traveled to Sri Lanka in January and visited the development, but his office said that he did so as a guest of the president and that there was no commercial aspect to that trip.

Mired in controversy

The Colombo Port City project has been controversial since its inception.

It was unveiled in 2014 by China’s Xi and Sri Lanka’s then-president, Mahinda Rajapaksa. Three years later, Sri Lanka handed it over to Chinese control after struggling to pay off its debt to Chinese firms.

Multiple concerns have been raised about the project, including its environmental impact; U.S. warnings it could be used for money laundering; and fears that it will ultimately be used as a Chinese military outpost.

Analysts have warned repeatedly that China is using the project to extend its strategic influence in the region. Beijing has already used the nearby Hambantota port — also funded by Chinese loans — to dock military vessels.

The main developer behind the Colombo Port City Project, CHEC Port City Colombo Ltd, has pumped in an initial $1.3 billion. Its ultimate owner is the China Communications Construction Company, a majority state-owned enterprise headquartered in Beijing.

Golden era no more

As prime minister, Cameron and his Chancellor George Osborne famously heralded a “golden era” of U.K. relations with China. Since leaving office in 2016, the ex-PM has come under heavy scrutiny over his lobbying activities, including for the now-collapsed finance company Greensill Capital.

The ex-PM has come under scrutiny for his lobbying activities, including for the now-bankrupt company Greensill Capital | David Hecker/Getty Images

For a period Cameron was also vice-chair of a £1 billion China-U.K. investment fund. The U.K. parliament’s intelligence and security committee said this year that Cameron’s appointment to that role could have been “in some part engineered by the Chinese state to lend credibility to Chinese investment.”

Sam Hogg, a U.K.-China analyst who writes the “Beijing to Britain” briefing, said: “As the ISC pointed out, China has a habit of utilizing former senior-ranking politicians to give credibility to their companies and projects.

“At a time when the Belt and Road Initiative is under intense scrutiny ahead of its 10^th anniversary next week, Cameron’s involvement will raise a few eyebrows.”

Luke de Pulford, executive director of the Inter-Parliamentary Alliance on China, added: “We can’t have a situation where the EU and U.S. are so concerned about the Belt and Road Initiative that they’re pumping billions into alternative projects, while our own former PM appears to be batting for Beijing.”

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Eleni Courea

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October 17, 2023
Putin to meet Xi in China this week

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Russian President Vladimir Putin will meet Chinese counterpart Xi Jinping in Beijing this week — a rare international visit by the Russian leader.

During the October 17-18 visit to Beijing, Putin will attend a forum marking 10 years of the Belt and Road Initiative, China’s global infrastructure program that has helped boost its influence worldwide.

Washington and Brussels have been eyeing with alarm the relationship between China and Russia, with Beijing refusing to condemn Moscow’s full-scale invasion of Ukraine, even as it has voiced support for the principle of territorial integrity.

Russia has increased its energy exports to China as it grapples with Western sanctions imposed as a response to the invasion of Ukraine.

EU foreign policy chief Josep Borrell urged China during a three-day trip to the country that wrapped up this weekend to use its influence with Russia, particularly on the U.N. Security Council, to stop the war in the country. He also warned Beijing that “any direct military support to Russia … would be a serious concern for us.”

The European Union is expected to have a summit with China before the end of the year.

This week’s Belt and Road Initiative Forum takes place against the background of a darkening economic picture for China, which has seen an economic slowdown, propelled in part by a property downturn. Representatives from more than 100 countries are expected to attend the forum in Beijing, including Hungarian Prime Minister Viktor Orbán.

At the same time, Defense Minister Li Shangfu has not been seen in public for more than six weeks, raising questions about his whereabouts and safety.

The visit to Beijing would mark Putin’s second international trip since the International Criminal Court (ICC) issued a warrant for the Russian leader’s arrest in March over the forced transport of children to Russia from Ukraine. Putin last week attended a summit of ex-Soviet nations in Kyrgyzstan. Neither Kyrgyzstan nor China is a party to the ICC.

CORRECTION: This story has been updated to indicated that the China trip would be Putin’s second international trip since the ICC issued its arrest warrant in March.

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Suzanne Lynch

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October 12, 2023
Senators to visit China amid growing tensions

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Senators to visit China amid growing tensions – CBS News

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A bipartisan delegation of U.S. senators will travel to China next week. The visit comes amid a time of persistent disagreement over policies concerning Taiwan, the South China Sea and what the U.S. calls genocide of the country’s Uyghur population. Patrick Cronin, Asia-Pacific security chair at the Hudson Institute, joins CBS News to discuss what’s at stake for the visit.

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October 3, 2023
Biden heads to Vietnam in latest attempt to draw one of China’s neighbors closer to the US | CNN Politics

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Hanoi, Vietnam
CNN
—

President Joe Biden will arrive at Chinese leader Xi Jinping’s doorstep on Sunday with a deal in hand to draw yet another one of China’s neighbors closer to the United States.

In just the last five months, Biden has hosted the Philippines’ president at the White House for the first time in over a decade; he has fêted the Indian prime minister with a lavish state dinner; and he has hosted his Japanese and South Korean counterparts for a summit ripe with symbolism at the storied Camp David presidential retreat.

At each turn, Biden’s courtship and his team’s steadfast diplomacy have secured stronger diplomatic, military and economic ties with a network of allies and partners joined if not by an outright sense of alarm at China’s increasingly aggressive military and economic posture, then at least by a growing sense of caution and concern.

The latest page in the US’s Indo-Pacific playbook will come via the establishment of a “comprehensive strategic partnership” that will put the US on par with Vietnam’s highest tier of partners, including China, according to US officials familiar with the matter.

“It marks a new period of fundamental reorientation between the United States and Vietnam,” a senior administration official said ahead of Biden’s arrival in Hanoi, saying it would expand a range of issues between the two countries.

“It’s not going to be easy for Vietnam, because they’re under enormous pressure from China,” the official went on. “We realize the stakes and the President is going to be very careful how he engages with Vietnamese friends.”

The US’ increasingly tight-knit web of partnerships in the region is just one side of the US’s diplomatic strategy vis-à-vis China. On a separate track, the Biden administration has also pursued more stable ties and improved communication with Beijing over the last year, with a series of top Cabinet secretaries making the trip to the Chinese capital in just the last few months.

The latter part of that playbook has delivered fewer results thus far than Biden’s entreaties to China’s wary neighbors, a dichotomy that was on stark display as Biden attended the G20 in New Delhi, while Chinese leader Xi Jinping did not.

The president did not appear overly concerned when questioned Saturday about his Chinese counterpart’s absence at the summit.

“It would be nice to have him here,” Biden said, with Modi and a handful of other world leaders by his side. “But, no, the summit is going well.”

As Biden and Xi jockey for influence in Asia and beyond, merely showing up can be seen as a power play and Biden sought to make the most of Xi’s absence, seizing the opening to pitch the United States’ sustained commitment both to the region and to developing nations around the world.

In Vietnam, it’s not only China whose influence Biden is competing with. As he arrived, reports suggested Hanoi was preparing a secret purchase of weapons from Russia, its longtime arms supplier.

On Monday, Biden plans to announce steps to help Vietnam diversify away from an over-reliance on Russian arms, a senior administration official said.

As China’s economy slows down and its leader ratchets up military aggressions, Biden hopes to make the United States appear a more attractive and reliable partner. In New Delhi, he did so by wielding proposals to boost global infrastructure and development programs as a counterweight to China.

Beijing and Moscow have both condemned a so-called “Cold War mentality” that divides the world into blocks. The White House insists it is seeking only competition, not conflict.

Still, the desire to pull nations into the fold has been evident.

On Saturday, Biden held a photo op with the leaders of India, Brazil and South Africa – three members of the BRICS grouping that Xi has sought to elevate as a rival to US-dominated summits like the G20.

If there is a risk in that approach, it is leaving nations feeling squeezed by rival giants. For Biden, however, there is an imperative in at least offering poorer nations an alternative to China when it comes to investments and development.

But increasingly, China’s neighbors – like Vietnam – are seeking a counterweight to Beijing’s muscular and often unforgiving presence in the region, even if they are not prepared to entirely abandon China’s sphere of influence in favor of the US’.

“We’re not asking or expecting the Vietnamese to make a choice,” the senior administration official said. “We understand and know clearly that they need and want a strategic partnership with China. That’s just the nature of the beast.”

Days before Biden’s visit and the expected strategic partnership announcement, China sent a senior Communist Party official to Vietnam to enhance “political mutual trust” between the two communist neighbors, the official Chinese Xinhua news agency reported.

Asked about Biden’s upcoming visit to Vietnam, China’s Foreign Ministry on Monday warned the US against using its relations with individual Asian countries to target a “third party.”

“The United States should abandon Cold War zero-sum game mentality, abide by the basic norms of international relations, not target a third party, and not undermine regional peace, stability, development and prosperity,” ministry spokesperson Mao Ning told a daily briefing.

Vietnam has also sought to maintain good ties with China. Its Communist Party chief was the first foreign leader to call on Xi in Beijing after the Chinese leader secured an unprecedented third term last October. In June, Vietnam’s prime minister met Xi during a state visit to China.

But even as it seeks to avoid China’s wrath, Vietnam is increasingly pulled toward the US out of economic self-interest – its trade with the US has ballooned in recent years and it is eager to benefit from American efforts to diversify supply chains outside of China – as well as concern over China’s military build-up in the South China Sea.

Experts say those tightened partnerships are as much a credit to the Biden administration’s comprehensive China strategy as it is a consequence of the way China has increasingly aggressively wielded its military and economic might in the region.

“China has long complained about the US alliance network in its backyard. It has said that these are vestiges of the Cold War, that the US needs to stop encircling China, but it’s really China’s own behavior and its choices that have driven these countries together,” said Patricia Kim, a China expert at the Brookings Institution.

“So in many ways, China’s foreign policy has backfired.”

The upgrading of the US-Vietnam relationship carries huge significance given Washington’s complicated history with Hanoi.

The two countries have gone from mortal enemies that fought a devastating war to increasingly close partners, even with Vietnam still run by the same Communist forces that ultimately prevailed and sent the US military packing.

While the upgrading of that relationship has been a decade in the making, US officials say a concerted drive to take the relationship to new heights carried that years-long momentum over the line.

A late June visit to Washington by Vietnam’s top diplomat, Chairman Le Hoai Trung, crystallized that possibility. During a meeting with national security adviser Jake Sullivan, the two first discussed the possibility of upgrading the relationship, according to a Biden administration official.

As he walked back to his office, Sullivan wondered whether the US could be more ambitious than a one-step upgrade in the relationship – to “strategic partner” – and directed his team to travel to the region and deliver a letter to Trung proposing a two-step upgrade that would take the relations to their highest-possible level, putting the US on par with Vietnam’s other “comprehensive strategic partners”: China, Russia, India and South Korea.

Sullivan would speak again with Trung on July 13 while traveling with Biden to a NATO summit in Helsinki.

The conversation pushed the possibility of a two-step upgrade in a positive direction, but it wasn’t until a mid-August visit to the White House by Vietnam’s ambassador to Washington that an agreement was in hand. Inside Sullivan’s West Wing office, the two finalized plans to take the US-Vietnam relationship to new heights and for Biden and Vietnam’s leader, General Secreatary Nguyen Phu Trong, to shake hands in Hanoi.

The trip was still being finalized when Biden revealed during an off-camera fundraiser that he was planning to visit. The remark sent the planning into overdrive.

Still, US officials are careful not to characterize the rapprochement with Vietnam – or with the Philippines, India, Japan and Korea, or its AUKUS security partnership with Australia and the United Kingdom – as part of a comprehensive strategy to counter China’s military and economic heft in the Indo-Pacific.

“I think that’s a deliberate design by the Biden administration,” said Yun Sun, the China program director at the Stimson Center. “You don’t want countries in the region or African countries to feel that the US cares about them only because of China because that shows a lack of commitment. That shows that, ‘Well, we care about you only because we don’t want you to go to the Chinese.’”

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September 9, 2023
Who are the G20’s bad guys now?

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NEW DELHI — When world leaders gather at the G20 summit on Saturday morning, the smiles may be more awkward than usual.

While China’s Xi Jinping and Russia’s Vladimir Putin won’t be there, a B-list of strongmen with their own damning human rights records will be ready to embarrass the leaders of Western democracy with some stiff handshakes and fixed grins.

Some of these international bad guys also have played an increasingly assertive role in negotiations on the Ukraine war — interventions welcomed by the Ukrainian government. However unsavory their domestic records may be, that means they can’t be ignored.

Take Saudi Arabia’s Mohammed bin Salman. According to U.S. intelligence, he approved the gruesome murder of journalist Jamal Khashoggi. But last month, he hosted a multinational meeting in Jeddah aimed at kick-starting peace talks. He’s also staying on after the G20 for a state visit in India.

Turkey’s President Recep Tayyip Erdoğan, who has locked up thousands of political opponents and stifled media freedom, met Putin just this week in an effort to unblock grain shipments through the Red Sea.

One official involved in preparations for the summit in Delhi this week joked that the optics will be challenging. “No one wants that photo-op with MBS, let’s face it,” the official said.

But overall, Western diplomats are unapologetic about engaging with the bad boys of the G20 — reflecting a growing realization in Western capitals the battle to win minds on the Ukraine war is not working and needs buy-in from the countries beyond the affluent capitals of Europe and North America.

“I’m not here to issue scorecards,” said U.S. National Security Adviser Jake Sullivan, when asked this week if President Biden was relaying U.S. concerns about Narendra Modi’s record on religious and press freedoms during his multiple meetings with the Indian leader.

Biden is expected to hold a meeting with MBS, with whom he shared an infamous fist-bump last year, a sign to many that all had been forgiven.

One European official involved in the preparations praised India for its work behind the scenes in trying to get consensus on an agreement rather than settling on different positions.

“If they succeed, it shows that the G20 has a future,” said the official, who was granted anonymity to speak openly due to the sensitive nature of the matter.

Ukraine remained the most divisive issue for G20 diplomats trying to hammer out a summit communique, with negotiations continuing late into Friday night.

U.S. President Joe Biden is expected to hold a meeting with Saudi Arabia’s Mohammed bin Salman | Pool photo by Madel Ngan via AFP/Getty Images

G7 countries — and the EU — are demanding that the principles enshrined in the U.N. Charter on territorial integrity and national sovereignty are reflected in the language.

Also weighing on minds is the global economy. German Chancellor Olaf Scholz touches down in Delhi just as economic figures showed that industrial production in Europe’s economic powerhouse nose-dived again in July.

China is battling a slowing economy and a real-estate crisis. But it’s countries like India that are witnessing the kind of accelerated growth levels that suggest it is on the up.

In New Delhi, giant posters of a smiling Modi, India’s prime minister, speckle the routes downtown.

This is India’s moment in the sun. Modi’s government has used its stint in the chair to show it can play a more assertive role in the global order.

India’s self-confidence as it hosts the global shindig signals a deeper geopolitical shift.

Three western officials with direct knowledge of the summit preparations said Brazil and South Africa, in particular, were playing a key role behind the scenes in coordination with India to get consensus on a final summit declaration, the holy grail of gatherings such as this.

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Suzanne Lynch

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September 7, 2023
G20 statement backs Ukraine but omits Russia blame for war

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NEW DELHI — The G20 endorsed language in support of Ukraine’s territorial integrity, but the group of the world’s biggest economies weakened a previous stance that directly blamed Russia for the war in Ukraine.

The joint communiqué for the G20 summit in India stated that all countries should “refrain from action against the territorial integrity and sovereignty or political independence of any state.” That language was unchanged from a draft first reported by POLITICO on Saturday.

The wording, which Western countries wanted in order to signal a continued anger at Russian President Vladimir Putin’s invasion of Ukraine, could also appease Moscow’s complaints that attacks inside Russia have escalated since Kyiv launched its counteroffensive. Russian Foreign Minister Sergey Lavrov was deeply involved in the weeks of negotiations leading to the final version.

But the joint statement didn’t include a direct condemnation of Russia’s invasion of Ukraine, which a G20 statement in Bali last November did. Some officials contend that a shift was the only way to get buy-in from some of the group’s more Moscow-friendly members — let alone the fact that Russia is also in the bloc.

Critics argued that U.S. President Joe Biden could have gotten more. Svitlana Romanko, founder and director of the pro-Ukraine group Razom We Stand, called the communiqué “weak” and “cowardly by not even mentioning Russia or its ongoing war crimes.”

But some G20 members say it reflected a fair compromise. “It is a fact that this is today a very polarizing issue and there are multiple views on this,” Indian External Affairs Minister Subrahmanyam Jaishankar said Saturday, referring to Ukraine. “Bali was a year ago, the situation was different. Many things have happened since then.”

There’s further language in the declaration that Western officials could herald as victories. It references adherence to the United Nations charter, which stipulates that no country can threaten another’s territory and sovereignty by force — a key demand of the U.S. and the EU in the run-up to the G20 summit. And it also calls for the “full, timely and effective implementation” of the Black Sea Grain Initiative which has stalled after Russia pulled out during the summer.

British Prime Minister Rishi Sunak has already touted the document as a “good and strong outcome.”

“What you’ll see in the communique is strong language, highlighting the impact of the war on food prices and food security, calling on Russia to re-enter the Black Sea grain initiative to allow exports to leave that part of the world and help feed millions of the most vulnerable people as well as the communique recognizing the principles of the U.N. charter respecting territorial integrity,” he said.

Eleni Courea contributed to this report.

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Suzanne Lynch and Alexander Ward

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September 7, 2023
UK’s Sunak raises ‘strong concerns’ over alleged China spy in parliament

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NEW DELHI — British Prime Minister Rishi Sunak raised “very strong concerns” with Beijing about China’s alleged interference in the U.K. parliament.

Sunak relayed his concerns to Chinese Premier Li Qiang at the G20 summit in India following the arrest of a purported Chinese spy working in the parliament.

Sunak told broadcasters in New Delhi that he expressed “very strong concerns about any interference in our parliamentary democracy, which is obviously unacceptable.”

He added that his meeting with Li in the margins of the G20 gathering was an example of the benefits of engagement rather than “shouting from the sidelines.”

“We discussed a range of things and I raised areas where there are disagreements,” Sunak said. “And this is just part of our strategy to protect ourselves, protect our values and our interests, to align our approach to China with that of our allies like America, Australia, Canada, Japan and others, but also to engage where it makes sense,” he said.

The Sunday Times reported that a parliamentary researcher with links to several senior Tory MPs, including the foreign affairs committee chair Alicia Kearns, was arrested under the Official Secrets Act.

The researcher was arrested along with another man on March 13. Officers from the Metropolitan police’s counterterrorism command, which covers espionage, are investigating, the paper said.

The researcher, in his 20s, was arrested in Edinburgh and the second man, who is in his 30s, was detained in Oxfordshire, according to the report. Police also carried out checks at an address in east London. Both men were held at a south London police station before being bailed until a date in early October.

The Inter-Parliamentary Alliance on China, which has pressed the U.K. government for a more hawkish stance toward Beijing, said it was “appalled at reports of the infiltration of the U.K. parliament by someone allegedly acting on behalf of the People’s Republic of China.”

Kearns declined to comment but said on social media: “While I recognize the public interest, we all have a duty to ensure any work of the authorities is not jeopardized.” A person close to her told the PA news agency: “It is inevitable the Chinese Communist Party would target and seek to undermine parliament’s leading voices who have demonstrated the ability to constrain the CCP’s ambitions.”

The researcher also had links to security minister Tom Tugendhat, but is said to have had no contact since Tugendhat took on that role, according to the Sunday Times report.

At the end of August, James Cleverly, the foreign secretary, visited Beijing amid criticism from hawkish Tory MPs.

Conservative MP Iain Duncan Smith said U.K. institutions were “deeply penetrated by the Chinese,” and that the government was “so desperately thinking about China as a business problem, they fail to realize how dangerously threatening China really is becoming.”

A meeting between Sunak and Li at the margins of the G20 had been discussed in the run-up to the summit, as POLITICO reported, but it was not confirmed until Sunday morning.

According to Chinese state-controlled news agency Xinhua, Li told Sunak that the U.K. and China should properly handle disagreements and respect each other’s interests and concerns.

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Eleni Courea

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September 7, 2023