US-China relations too strained

I recently attended the China Development Forum (CDF) in Beijing, an annual gathering of senior foreign business leaders, academics, former policymakers, and top Chinese officials. This year’s conference was the first to be held in person since 2019, and it offered western observers the opportunity to meet China’s new senior leadership, including new premier Li Qiang.

The event also offered Li his first opportunity to engage with foreign representatives since taking office. While much has been said about the Chinese president, Xi Jinping, appointing close loyalists to crucial positions within the Communist party of China (CPC) and the government, our discussions with Li and other high-ranking Chinese officials offered a more nuanced view of their policies and leadership style.

Prior to becoming premier in March, Li served as the CPC secretary in Shanghai. As an economic reformer and proponent of private entrepreneurship, he played a crucial role in convincing Tesla to build a mega-factory in the city. During the Covid-19 pandemic, he enforced Xi’s strict zero-Covid policy and oversaw a two-month lockdown of Shanghai.

Fortunately for Li, he was rewarded for his loyalty and not made into a scapegoat for the policy’s failure. His close relationship with Xi also enabled him to convince the Chinese president to reverse the zero-Covid restrictions overnight when the policy proved to be unsustainable. During our meeting, Li reiterated China’s commitment to “reform and opening up”, a message that other Chinese leaders also conveyed.

Li’s remarkable wit contrasted sharply with the more reserved demeanour of former premier Li Keqiang, whom we met in earlier years when he was premier. During our meeting, he made Apple CEO Tim Cook laugh out loud by attributing his joyful mood to the viral video of Cook being applauded by crowds during his visit to an Apple store in Beijing. He even joked about a video of US lawmakers grilling TikTok CEO Shou Zi Chew, which had also gone viral that week. Unlike Cook, he noted, the beleaguered TikTok boss was not smiling during his congressional hearing. Li’s joke included an implicit warning that although US firms are still welcome in China, the Chinese government can play hardball if its firms and interests are treated harshly in the US.

Li’s veiled threat captures the current Chinese attitude towards the US. Although senior economic policymakers in China often talk about opening up, China’s policies still prioritise security and control over reform. Qin Gang, China’s new foreign minister, adopted a hawkish stance during his development forum address. Taking an implicit swipe at the US, Qin warned western attenders that while China aims to maintain an open global trading regime, the country would respond forcefully to any attempt to drag it into a new cold war.

In a recent speech, US treasury secretary Janet Yellen sought to alleviate China’s concerns that America is trying to “contain” its rise and decouple from its economy. Recent American actions limiting trade with China, she clarified, were based on national security concerns rather than an effort to hinder the country’s economic growth.

But assuaging China will be difficult when the US is reportedly planning to introduce far-reaching restrictions on Chinese investments in the US and on American investments in China. To date, Chinese officials have not been receptive to Yellen and secretary of state Antony Blinken’s efforts to establish a dialogue on how to maximise cooperation, minimise areas of confrontation, and manage the two powers’ escalating strategic competition and rivalry.