Xi is positioning China as the world’s indispensable economy

It’s now Biden’s America, but whose world will it be?

Expect China’s President Xi Jinping to answer that question unequivocally on Monday with his keynote at the World Economic Forum’s first global virtual meeting. It will leave little doubt that managing relations with China will be both President Joe Biden’s most immediate and most defining foreign policy challenge.

It’s hard to imagine more dramatic timing for Xi’s “special address,” coming in the wake of Biden’s inaugural, Trump’s second impeachment and the Capitol insurrection that prompted it.

Whatever words Xi chooses, his message will be clear: this is China’s historic moment. With modifications for global listeners, it will echo the theme he delivered a few days ago to a gathering of provincial and ministerial level officials at the Communist party school.

 “The world is undergoing profound changes unseen in a century,” Xi said, kicking off a celebration-strewn hundredth anniversary  year of the Chinese Communist Party’s creation.  He declared that the “time and situation” had turned in China’s favor.  “This is where our determination and confidence are coming from.”

In a relieved Washington this week, all eyes were on President Biden. He sounded his determination to heal and unify the United States, and he announced his audacious  move to unleash the U.S. economy with a $1.9 trillion Covid relief package, and infrastructure spending bills to follow.  Internationally, Biden’s focus will be on  rallying democratic partners and allies to counter China’s authoritarian gambits.

 Yet 2021 may instead be more the year of Xi Jinping than of Joe Biden. The Chinese leader is leveraging  the centennial of his Communist Party and China’s emergence as the first major economy to return to growth after Covid-19 to strengthen his individual authority, to tighten the party’s unrivalled control, and to accelerate China’s rise and increased global influence through new investment and trade deals.

At the same time, Xi is laying the ground work for the  20^th Party Congress in the second half of 2022, which could formally seal his long-term tenure as China’s paramount leader. Along the way, he has been crushing dissent and rivals, reigning in the country’s biggest private businesses starting with Jack Ma, and deploying digital and surveillance methods to assert control in a manner that he hopes will be more enduring, efficient, productive and less violent than that of Mao Tse-tung.

The world won’t like all of what it sees, but Chinese officials are drawing the comparison of their economic resilience and political stability in  2020 with the dramatic dysfunctions of American democracy and the reality that the pathogen China unleashed has been far less effectively managed, and thus far more damaging, in the United States.

China drove home that narrative through this week’s announcement that the country achieved 2.3% GDP growth in 2020, far outperforming an expected U.S. decline of 3.6 %, a European Union downturn of 7.4% and a global economic pullback of 4.3%. For the first time ever, China passed the United States as Europe’s leading trading partner through the first eleven months of last year. 

Most challenging for President Biden is that China has taken a series of pre-emptive steps through trade and investment deals that will complicate his efforts to reinvigorate Asian and European alliances and partnerships. These will be difficult to counter due to his Democratic Party’s reluctance to negotiate new trade arrangements  and the detritus of President Trump’s punitive tariffs and sanctions.

Shortly after Biden’s election in November, China signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Asia countries. Then in December, Beijing offered surprise concessions to break a negotiating deadlock and close an investment agreement with the European Union shortly before Biden’s inauguration.

To ensure the significance of the deal wasn’t missed, Chinese Foreign Minister Wang Yi at a lunch for EU ambassadors praised this demonstration of Europe’s “strategic autonomy.”

President Xi even has expressed interest in joining the higher value Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade liberalization pact among Canada and ten Asian-Pacific Countries that the United Kingdom is applying to join. The U.S. continues to suffer from Trump’s withdrawal from negotiations that created that agreement during the first days of his presidency.

Xi’s underlying message: the U.S. may once have been what former Secretary of State Madeleine Albright called “the indispensable nation,” but China now has become “the indispensable economy.”

President Biden’s opportunity is that Xi may overplay his hand internationally through bullying and at home through an over-concentration of power. His crackdown on private business will render his economy less productive. And history is littered with examples that excessive authoritarianism is ultimately unsustainable. 

The Biden administration approach to the China challenge seems to be one of urgent patience, leading with the reinvigoration of the U.S. economy and the prioritization of alliances and partnerships.

For deeper insights, it’s worth reading the impressive recent body of work by Kurt Campbell, who President Biden has brought into the White House as his right hand on China and Asia matters. Campbell sees the need to rise to the China challenge as “a rare area susceptible to bipartisan consensus” that can be leveraged to steer a path away from U.S. decline.

With co-author Rush Doshi in Foreign Affairs, Campbell wrote in December: “Meeting this challenge requires the kinds of reinvestments in American competitiveness and innovation that are also critical to domestic renewal and working class prosperity. Policy makers should link these two agendas, not to amplify American anxieties but to make clear that accomplishing the country’s most important domestic tasks will also have salutary effects abroad.”

As Biden’s presidency enters its first 100 days, he can’t take his eyes off President Xi’s efforts to leverage the anniversary of the first 100 years of the Communist Party’s power. Biden faces a wide array of international challenges, but this contest will be the one that will define his place in history—and whether democracy or authoritarianism will be the ascendant system for the future.

Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.

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