Xi, Biden Discussed Phase One Agreement, With No Breakthroughs

Stephen Olson, a Hong-Kong based Hinrich Foundation fellow, also wrote, "Both sides are likely looking for an elegant way to move past the Phase One agreement negotiated under the Trump administration. That agreement has failed to appreciably advance the interests of either side, but it can’t simply be ignored. There must be a resolution that’s palatable to both sides. The Biden team has 'boxed themselves in' somewhat by saying they intend to hold China’s feet to the fire on implementation. At the same time, they recognize that the purchase commitments are never going to happen and that the tariffs are harming at least some segments of the US economy."

In China's summary of the call, it said President Xi Jinping suggested that the trade conflict between the U.S. and China is having spillover effects on the world economy. He said "the essence of Sino-US economic and trade relations is mutual benefit and win-win. When doing business, we should not politicize Sino-US economic and trade issues. ... The US should stop abusing and generalizing the concept of national security to suppress Chinese companies." He also said, " The earth is large enough to accommodate China and the United States for their own and common development. We must insist on mutual benefit, do not play zero-sum games, and do not engage you in winning or losing."

The American desire to counter China's trade-distorting industrial policy led to the tariffs, and the Chinese summary talked obliquely about that policy by saying that the U.S. and China must "respect each other’s social systems and development paths, respect each other’s core interests and major concerns, respect each other’s development rights, treat each other as equals, manage differences, and seek common ground while reserving differences." The U.S. summary was more direct, which said President Joe Biden "was clear about the need to protect American workers and industries from [China]’s unfair trade and economic practices."

The U.S. has also ramped up its enforcement of the import ban on goods made with forced labor, and the U.S. summary said that Biden "raised concerns about [China]’s practices in Xinjiang, Tibet, and Hong Kong, as well as human rights more broadly."

A background call by a U.S. government official after the leaders' call said: "We were not expecting a breakthrough. There were none to report." The official also said that Biden told Xi it's important that China fulfill its phase one commitments, "and [about] his desire to see real progress on the conversations that Ambassador Tai is having with her counterpart, Vice-Premier Liu He."

The Chinese summary said that Xi said China is determined to further open its market to exporters and foreign investment, and said that will surely provide countries with more opportunities. He said China will "create a more market-oriented, legalized, and international business environment."

That is what the U.S.-China Business Council is seeking, and that group said more trade talks need to be scheduled on those topics. "We greatly appreciate the two leaders’ lengthy and candid discussions and their shared commitment to work toward strategic stability for the benefit of both our countries and the world. Given that US-China economic and trade ties have been a ballast of the relationship and can help manage strategic risks, we hope separate meetings will be scheduled soon to discuss economic and trade issues with China,” USCBC President Craig Allen said. “Such issues include reducing US and Chinese tariffs; ensuring more equitable market access for US companies; easing travel restrictions to China; fully implementing China’s Phase One commitments; moving to further negotiations, including on China’s subsidies of state-owned enterprises; and meeting China’s WTO obligations.”