Special Report on the US-China Summit at APEC: Between ‘Managed Competition’ and ‘Securing the Right to Development’: Seeking Cooperation at the 2023 APEC US-China Summit

At the Bali Summit last November, the United States and China pledged to establish guardrails and pursue responsible competition to prevent strategic competition between the two countries from escalating into confrontation and conflict. Although bilateral relations became strained due to the spy balloon incident in February of this year, a period of "exploration" and "adjustment" towards cooperation was navigated through a series of high-level meetings. National Security Advisor Jake Sullivan and Politburo member and Foreign Minister Wang Yi of the Chinese Communist Party met in Vienna in May, Malta in September, and Washington D.C. in October. Starting with Secretary of State Antony John Blinken in June, four US cabinet-level officials visited Beijing in succession. Just before the APEC summit, Secretary of the Treasury Janet Yellen met with Vice Premier He Lifeng of China for final coordination. The summit held during the Asia-Pacific Economic Cooperation (APEC) in San Francisco can be seen as an effort to restore bilateral relations to the level of the Bali Summit.

The two core issues on the table at this US-China summit were Taiwan and economic matters related to advanced technology and export controls. Therefore, the success of the summit depended on the extent to which common ground was reached on these two core issues. In the end, no compromise was reached on the issues, but an agreement was made on strengthening communication and building trust through the resumption of high-level military dialogue. The two countries also agreed to establish intergovernmental dialogues on drug trafficking and artificial intelligence (AI) and to revitalize people-to-people exchanges.

In fact, these outcomes were largely predetermined through the preceding series of high-level US-China official meetings and the exploration of new relations. To evaluate this summit, it is crucial to accurately analyze the outcomes of the meetings held in June when Secretary of State Blinken visited China and met with former Foreign Minister Qin Gang, Minister Wang Yi, and President Xi Jinping, as well as the meeting between Advisor Sullivan and Director Wang Yi in Malta in September, which lasted for 12 hours.

United States – Managed Competition

The Biden administration's China policy is often characterized by three "C's": "competition," "cooperation," and "confrontation." During his visit to China in June, Secretary of State Blinken emphasized "competition." He made it clear that the US would "compete vigorously" with China and stressed the need to maintain communication channels to minimize potential miscalculations. Simultaneously, discussions covered strengthening US-China people-to-people exchanges, addressing synthetic drug issues like fentanyl, rectifying China's unfair economic practices, expressing concerns over human rights issues in Xinjiang, Tibet, and Hong Kong, and maintaining stability in the Taiwan Strait (U.S. Department of State 2023/6/19).

Conversely, President Xi Jinping and Foreign Minister Wang Yi opposed defining US-China relations as "competition" and emphasized adherence to the three principles of "mutual respect (相互尊重)," "peaceful coexistence (平和共存)," and "win-win cooperation (合作共赢)." They also explained the historical inevitability of the rejuvenation and development of the Chinese nation. Furthermore, they demanded that the US cease its pursuit of a new Cold War, attempts to transform China's system, and actions to hinder China's scientific and technological advancement through illegal and unilateral sanctions based on the "China threat theory," and cease interfering in China's internal affairs, such as the Taiwan issue (PRC Ministry of Foreign Affairs 2023/6/19a; 2023/6/19b).

At the meeting in Malta in September, Advisor Sullivan reportedly emphasized peace and stability in the Taiwan Strait and the maintenance of strategic communication channels (White House 2023). In response, Foreign Minister Wang Yi stressed that the Taiwan issue is a core interest that China cannot concede, that China's growth is a historical inevitability driven by strong internal momentum and cannot be stopped, and that the right to development is a legitimate right of the Chinese people that cannot be taken away. He also emphasized that the US's "small yard, high fence" approach, which is central to de-risking, is ultimately an infringement on China's right to development and is not significantly different from decoupling (Bai 2023/9/18).

While the US has adjusted its China policy from decoupling to de-risking, it fundamentally maintains a hardline stance based on strategic competition. As indicated by Kurt Campbell's remarks on June 14, as long as Xi Jinping is in power, fundamental cooperation is currently difficult due to core and fundamental strategic interests clashing between the two countries and differing basic rules and norms in their policy directions (U.S. Department of State 2023/6/14). Nevertheless, the US acknowledges that China's development offers significant opportunities for both the US and the international community, and that China is an important partner for jointly addressing transnational threats.

The US strategy involves maintaining overwhelming superiority in the military and security domain, actively competing with China in areas of new technology that will critically influence future military balance through export controls and investment restrictions, while maintaining broad interdependence in the economic sphere, considering the interests of American companies and allies.

The US perceives itself as gradually gaining an advantage in its strategic competition with China over the past year. Above all, China's economic growth rate is declining, not due to relatively short-term trends like the COVID-19 pandemic or US export controls, but due to fundamental problems within the Chinese economy. These are long-term structural issues stemming from insufficient opportunities for qualitative growth and innovation, and particularly from the strengthening of an individualistic authoritarian political system, which reduces economic predictability and prioritizes political logic over market logic.

In this context, President Biden views the Chinese economy as a ticking time bomb and recognizes that the Chinese political system has inherent flaws, as evidenced by the spy balloon incident, making it incapable of fully managing all events within China, even for a dictator.

Internationally, China's initiatives such as the Belt and Road Initiative, Global Security Initiative, Global Development Initiative, and Global Civilization Initiative have not garnered widespread international support. Instead, China's ideological foreign policy, exemplified by its wolf warrior diplomacy, is seen as weakening its competitiveness.

Based on this assessment, the US intends to continue strategic competition while focusing on preventing the competition from escalating into confrontation. President Biden described his conversation with President Xi Jinping after the APEC summit as "constructive and candid," noting that despite differences in opinion, strategic competition must be managed responsibly, taking into account the positions of neighboring countries.

China – Securing the Right to Development

Meanwhile, President Xi Jinping's arrival in San Francisco occurred amidst a complex and unstable domestic political and economic situation, marked by the real estate crisis, sluggish local economies, high unemployment, declining foreign direct investment in China, and public mourning following the sudden death of former Premier Li Keqiang. Therefore, concrete diplomatic achievements that could offset domestic instability were more necessary than ever.

President Xi adopted an economic-focused diplomatic stance, emphasizing the importance of US-China dialogue and supporting improved relations. He also declared an open strategy for expanding free trade and foreign investment. The Chinese Ministry of Foreign Affairs positively summarized the summit as constructive and comprehensive, providing direction for improving and developing China-US relations.

However, a closer examination of the summit's details reveals that China did not achieve any substantial concessions from the US on the two core issues it sought to address: Taiwan and US economic sanctions against China. Despite this, the Chinese Ministry of Foreign Affairs selectively summarized the summit's content, focusing on President Xi Jinping's statements and portraying it positively. This evaluation appears to be heavily influenced by China's domestic political considerations.

Examining President Xi Jinping's remarks, the agenda China prioritized at the summit can be summarized as the Taiwan issue and China's right to development. President Xi reaffirmed China's commitment to unification and asserted that the US must demonstrate concrete actions by not supporting Taiwan's independence. According to the US announcement, the US warned against China's military blockade of Taiwan, attempts to alter the status quo by force, and human rights abuses in Hong Kong and Xinjiang. The US also raised the issue of the South China Sea and emphasized freedom of navigation and overflight. The US also mentioned the complete denuclearization of North Korea.

China advocates for "sovereignty," "security," and "development interests" as its three core interests. The Xi Jinping administration officially emphasizes sovereignty, particularly the Taiwan issue, as the core of its core interests. However, while the Taiwan issue is a matter of principle, achieving either independence or unification is practically a difficult and intractable challenge.

Therefore, at this summit, Xi Jinping placed particular emphasis on development interests, or the right to development. While explaining Chinese-style modernization, President Xi asserted that China's path of development is legitimate and should not be obstructed by the US. President Xi strongly criticized the US for infringing upon China's legitimate right to development through export controls, investment reviews, and unilateral sanctions. For the Xi Jinping government, facing regime instability due to economic crisis, economic development is a practical and urgent task directly linked to strengthening its legitimacy and ensuring regime stability. To re-enter the path of economic development and secure its legitimacy, the Xi Jinping government urgently needs to ease US economic and high-tech sanctions. Consequently, President Xi is likely to focus diplomatic efforts on easing Biden administration sanctions through various channels, including engagement with the US business community, in the future. In this context, President Xi is dedicating significant effort not only to the summit but also to diplomacy with the private sector, including US industries, during his visit to San Francisco.

Furthermore, President Xi has actively pursued economic diplomacy targeting APEC member states. China recently hosted a major Belt and Road Forum to mark its 10th anniversary and President Xi Jinping personally attended and spoke at an international symposium commemorating the 10th anniversary of the presentation of his neighborhood diplomacy concept. He is demonstrating a willingness to strengthen relations with neighboring countries and secure allies in response to US economic pressure. The reason President Xi pursued a trip to the US, despite the uncertain substantive outcomes of this summit, is that the APEC summit provides an important diplomatic stage that combines neighborhood diplomacy with multilateral diplomacy. In his opening address, President Xi criticized the US pressure for decoupling, particularly in the high-tech sector, called for adherence to openness, and declared opposition to the "politicization, weaponization, and securitization of economic and trade relations" that undermine the stability and smooth functioning of industrial supply chains, as part of an effort to garner support from emerging economies and developing countries in the region.

Compromise and Agreement

President Biden faces the challenging task of maintaining advanced technology export controls while simultaneously preserving or expanding US companies' access to the Chinese market. It is well-known that US big tech companies are increasingly dissatisfied with the prolonged duration of advanced technology export controls. Therefore, it is time to seek an opportunity for change in some form, and a consensus on the need for negotiation has emerged. However, it was confirmed that a significant gap still exists between the US and China in terms of specific implementation measures and their conversion into tangible outcomes. President Biden firmly stated that he has no intention of providing advanced technologies that could be repurposed for military use to China, and he did not hesitate to express concerns about the restrictions on the activities of US companies in China. This confirms that de-risking is a strategy aimed at eliminating national security threats through the diversion of advanced technologies and at maintaining and expanding US companies' access to the Chinese market.

Nevertheless, the US-China summit yielded concrete results, including an agreement to curb the distribution of precursor materials for fentanyl, the promotion of dialogue on defense policy and maritime security between the US and China, and the maintenance of high-level military talks to prevent crises. An agreement was also reached to establish intergovernmental dialogues on artificial intelligence (AI). From the US perspective, it dismissed President Xi Jinping's concerns about advanced technology export controls and drew China into a new domain of AI regulation. Both leaders found common ground in creating a forum for experts to discuss AI risks and safety issues. China's expressed interest in participating in discussions on the establishment of AI rules and norms is a positive sign, as no one wants a world where nuclear weapons are controlled by AI.

However, it remains uncertain whether China will maintain a cooperative stance as the US takes the lead in establishing autonomous international norms for AI and fosters an environment where China accepts them. In October 2023, President Biden signed an Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence. This order is considered not only the "most significant action on AI safety" but also a crucial step for the US to secure a leading role in managing the risks posed by AI. It is noteworthy that significant disagreements may arise between the US and China during the implementation phase of this executive order. Given that the establishment of norms and rules carries strong security implications, it is unlikely that China will be able to keep pace with the US's swift actions.

IPEF and the Regional Economic Order

This summit also holds significant implications for the regional economic order in the Indo-Pacific. From the US perspective, APEC serves as an opportunity to advance negotiations for the Indo-Pacific Economic Framework (IPEF). While it is true that the Biden administration's initial plan to announce the conclusion of IPEF negotiations at the APEC summit, thereby publicizing its official channel for re-engagement in the Indo-Pacific, was disrupted, significant progress has been made in areas such as cooperation on decarbonization through clean energy and anti-corruption measures, including tax evasion. Agreements have been reached in three pillars: supply chains, clean energy, and fair economy. However, consensus has not been reached among participating countries on the trade pillar, which is of greatest interest. This is due to strong resistance from developing countries to the US attempt to strengthen labor and environmental standards. Coupled with dissatisfaction from US tech companies regarding limited benefits in digital trade, reaching an agreement is expected to face difficulties.

Trust but Verify

The US is likely to continue its strategy of preempting issues, sometimes pressuring China and sometimes drawing it into negotiations. In this regard, the US and China have restored dialogue channels to contain conflict and explore conditions for cooperation. In a situation where trust-based negotiations are practically difficult, this approach serves as a second-best option. When asked, "Do you trust President Xi Jinping?", President Biden's response, alluding to the old adage "trust but verify," suggests the current state of US-China relations.

South Korea's response must be based on a sober analysis of the duality of US-China relations. A rigorous analysis of the changing elements and the structurally immutable elements in US-China relations is required. While de-risking has indeed served as a turning point in the US strategy toward China, this summit has revealed both achievements and future challenges. South Korea needs to combine a systematic response based on an analysis of the core objectives of the US and China with a flexible response on a case-by-case basis. To this end, it is necessary to continuously enhance internal capabilities, such as competitiveness in advanced industries, while simultaneously managing the risks arising from US-China strategic competition and expanding cooperation with like-minded countries. In many areas of US-China strategic competition, including advanced technologies, global rules and norms have not yet been firmly established. South Korea needs to secure a space for action through cooperation with like-minded countries to fill these gaps. Although the challenge of navigating high uncertainty is considerable, the current moment paradoxically presents an opportunity for South Korea to transform from a rule-follower to a rule-maker.

High-Level US-China Military Dialogue and Communication

The US-China summit agreed to maintain high-level military talks for crisis prevention. China emphasizes its fundamental stance that US-China relations should be based on the three principles of mutual respect, peaceful coexistence, and win-win cooperation. In his speech at the CEO dinner, President Xi Jinping strongly emphasized that US-China relations should not be a bloc confrontation and that a new Cold War is not feasible. He stressed the importance of maintaining an open and inclusive international order through US-China cooperation, strengthening the UN-based rules-based order, and restoring multilateralism by overcoming protectionism. Within this context, he presented that China's economic development benefits the international community, China pursues peaceful economic development, and aims for open modernization. These discussions can be interpreted as China's recognition that US-China relations are indeed competitive and its attempt to explore various paths for development while managing current difficulties, in order to revive its struggling economy.

Within the official discourse at APEC, China warns against confrontation and conflict and speaks of coexistence and common prosperity, but it does not officially use the term "competition" as defined by the US. Although China does not officially accept the concept of competition, it can be inferred that China is aware that US-China relations are effectively competitive and is seeking various paths for development while managing this competition.

Ultimately, this summit can be seen as a tentative compromise based on the common interest of the US and China to prevent their intense competition from escalating into confrontation, or even military conflict. While selective areas of cooperation are identified and a foundation for cooperation is laid, the primary focus is on establishing communication channels, preventing misunderstandings, promoting accurate understanding of each other's intentions, and enhancing transparency.

Both the US and China have pledged to continue high-level dialogues and are expected to cautiously explore more areas of cooperation. In particular, nuclear arms control and AI regulation will be crucial future issues. Given China's rapid nuclear arsenal expansion, nuclear disarmament between the US and China is a highly significant matter. A deputy-assistant level US-China arms control dialogue was already held on November 7, where discussions on nuclear safety and arms control in general appear to have taken place.

While the US side clearly mentions nuclear arms control between the two countries and recognizes transparency enhancement as a key issue, China only refers to "regular" arms control and does not specifically articulate its position on the nuclear competition between the two nations. It is unlikely that China will engage in arms reduction negotiations that limit its nuclear capabilities before reaching the level of the US and Russia.

The initiation of discussions between the US and China on AI-based nuclear strategies, which aim to automate the nuclear weapons operational process, is a highly desirable development. The automation of nuclear weapons command and control systems could lead to unintended escalation into nuclear war, making the proactive management of AI a positive outcome.

It remains a critical question whether the North Korean nuclear issue can be discussed within the framework of US-China nuclear arms control talks. China has tended to attribute North Korea's nuclear capability advancements to the US's lukewarm approach to denuclearization talks and the strengthening of ROK-US-Japan security posture. However, North Korea is actively embracing the new Cold War discourse, even rejecting it by China, and is now pursuing a new Cold War strategy. By strengthening ties with Russia, it aims to enhance its economic and diplomatic standing globally, not just on the Korean Peninsula, through policies of arms exports and proliferation.

This occasion underscores the need for South Korea's proactive diplomatic efforts to appropriately curb North Korea's new Cold War strategy and reaffirm the goal of denuclearization amidst evolving international dynamics. ■

References

Bai, Yunyi. 2023. “Wang-Sullivan talks last more than 12 hours; Taiwan question takes up longest time, Chinese FM official told GT.” Global Times. September 18. https://www.globaltimes.cn/page/202309/1298392.shtml(Accessed: November 20, 2023).

PRC Ministry of Foreign Affairs. 2023a. “President Xi Jinping Meets with U.S. Secretary of State Antony Blinken.” June 19. https://www.fmprc.gov.cn/eng/zxxx_662805/202306/t20230619_11099957.html(Accessed: November 20, 2023).

_______________________________. 2023b. “Wang Yi Meets with U.S. Secretary of State Antony Blinken.” June 19. https://www.mfa.gov.cn/eng/zxxx_662805/202306/t20230619_11099852.html(Accessed: November 20, 2023).

U.S. Department of State. 2023. “Readout: Secretary Blinken’s Visit to the People’s Republic of China (PRC). Office of the Spokesperson. June 19. https://www.state.gov/secretary-blinkens-visit-to-the-peoples-republic-of-china-prc/(Accessed: November 20, 2023).

________________________. 2023. “Deputy Assistant to the President and Coordinator for Indo-Pacific Affairs Kurt Campbell and Assistant Secretary of State for East Asian and Pacific Affairs Daniel J. Kritenbrink On the Secretary’s Upcoming Travel to the People’s Republic of China and the United Kingdom.” Special Briefing. Office of the Spokesperson. June 14. https://www.state.gov/deputy-assistant-to-the-president-and-coordinator-for-indo-pacific-affairs-kurt-campbell-and-assistant-secretary-of-state-for-east-asian-and-pacific-affairs-daniel-j-kritenbrink-on-the-secretary/(Accessed: November 20, 2023).

■ Son Yeol_Director of EAI. Professor at Graduate School of International Studies, Yonsei University.

■ Kim Yang-gyu_Senior Research Fellow at EAI. Lecturer at the Department of Political Science and International Relations, Seoul National University.

■ Lee Dong-ryul_Director of EAI China Studies Center. Professor at the Department of Chinese Studies, Dongduk Women's University.

■ Lee Seung-joo_Director of EAI Trade, Technology, and Transformation Center. Professor at the Department of Political Science and International Relations, Chung-Ang University.

■ Jeon Jae-sung_Director of EAI National Security Research Center. Professor at the Department of Political Science and International Relations, Seoul National University.

■ Ha Young-sun_Chairman of EAI. Professor Emeritus at Seoul National University.

■ Responsible for and edited by: Park Ji-soo, Research Fellow at EAI

Inquiries: 02 2277 1683 (ext. 208) | jspark@eai.or.kr