China Watch: Xi’s Foreign Policy

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Since the conclusion of the Communist Party Congress on 23 October, Chinese President Xi Jinping has been using his meetings with world leaders to reassure them that China remains open for business and is willing to improve frayed relations with the West and Japan. Nevertheless, Xi made it clear that China will engage on its own terms and will confront what he views as Western attempts to contain China. Xi has emphasized the importance of “heads-of-state diplomacy,” code words to indicate that he controls China’s foreign policy.

Xi’s statements and Chinese media commentary suggest that his recent diplomatic charm offensive has three primary goals: 1) stabilize US-China relations to prevent an imminent economic decoupling and curb further US support for Taiwan, 2) use China’s economic leverage to exploit possible rifts among US allies, and 3) promote an alternative, anti-Western alliance of developing and authoritarian-leaning countries to undercut US global influence.

Stabilizing Sino-US Relations
Xi likely is pleased with the 14 November meeting with President Biden on the sidelines of the G20 summit in Indonesia, the first in-person meeting since Biden took office. US export controls on advanced technology, increasing support for Taiwan, and China’s slowing economy have shifted the bilateral competition in favor of Washington, making the Biden meeting a top priority for Xi. Chinese state media portrayed the meeting positively, highlighting Biden’s statements rejecting a decoupling with China and opposing Taiwan independence.

Beijing is concerned a technological decoupling with the West—particularly restrictions on semiconductor technology—will inflict serious damage to China’s economic development. As we wrote in a previous issue of China Watch, Beijing judges that it has more to lose in the short-to-medium term from a technological decoupling.
Beijing is alarmed that the closer relationship between Washington and Taipei could embolden pro-independence politicians in Taiwan to formally declare independence. Beijing is also concerned about a future US-Taiwan free trade agreement that is currently under discussion and a draft bill in the US Congress—the Taiwan Policy Act of 2022—that would designate Taiwan as a major non-NATO ally and provide significant security aid to purchase military equipment.

China will continue its saber rattling around Taiwan to persuade Washington that it is ready to use force. In addition, Beijing will approach US government, business, and academic interlocutors to warn them that Xi has “moved up” the timeline to resolve the Taiwan issue, even though neither Xi nor the Chinese government has set a timeline on unification with Taiwan.

The Xi-Biden meeting has kickstarted bilateral trade talks, as US Trade Representative Katherine Tai met with her Chinese counterpart on 18 November, her first meeting with a senior Chinese official. China has also signaled that it is ready to restart bilateral defense exchanges, which China suspended after the Pelosi visit to Taiwan in August. On 22 November, Chinese Defense Minister Wei Fenghe met with US Defense Secretary Lloyd Austin on the sidelines of the ASEAN Defense Minsters’ Meeting.

However, the future of high-level bilateral military dialogue is uncertain. Wei is scheduled to retire in March 2023, and his presumed successor, General Li Shangfu, has been under US sanctions since 2018 for his role in purchasing Russian weaponry. Beijing will almost certainly demand Washington lift sanctions on Li before any talks can take place, which will be difficult for the Biden administration, given bilateral support for taking a tough line on China and Russia.

Courting US Allies
In a series of recent meetings with European and East Asian leaders, Xi appealed to each county’s economic interests in a strategy to weaken the emerging consensus among US allies to contain China’s ambitions. Xi emphasized the need for Europe to pursue an independent foreign policy from the United States in his recent talks with German, French, and Dutch leaders.

Xi told German Chancellor Olaf Scholz on 4 November in Beijing that China’s relationship with Europe is not “targeted at, dependent on, or subject to a third party,” a clear reference to the United States.
China is looking to Germany as a source of investment and technological know-how. Xi proposed that China and Germany expand their economic cooperation to include fields such as artificial intelligence, alternative energy, and digitalization. However, Germany is increasingly wary of China’s quest for Western technology. On 9 November, Berlin announced that it was blocking the sale of two German chipmakers to Chinese buyers.
On 15 November, Xi met with French President Emmanuel Macron in Indonesia and called on France to treat Chinese businesses fairly, a likely reference to the Macron government’s careful approach toward Chinese investments in France. Xi also told Macron that China is open to cooperating with France in high-tech and new energy sectors and hinted that French companies would profit from these new opportunities.
In his meeting with Dutch Prime Minister Mark Rutte on 15 November in Indonesia, Xi warned against economic “decoupling” and the politicization of trade. Xi’s remarks were almost certainly directed at Dutch company ASML’s decision to halt the export of advanced chipmaking equipment to China, at the request of the US government.

In Xi’s meetings with Japanese and South Korean leaders, he stressed the importance of China’s bilateral relationship with each country and the need for “strategic autonomy,” as opposed to following the lead of the United States. Xi met with Japanese Prime Minister Fumio Kishida in Thailand on 17 November on the sidelines of the APEC summit, marking the first leadership-level talk in three years.

Japanese media was cautiously optimistic about the meeting. Xi stressed the interdependency of the two economies and called for more cooperation in areas such as the digital economy, green development, financial services, and healthcare. The two sides will restart high-level economic talks and other ministerial exchanges, which were suspended due to COVID and rising tensions over China’s military aggression, territorial disputes, and Taiwan.
In the meeting with South Korean President Yoon Suk Yeol in Indonesia on 15 November, Xi called on the two countries to accelerate negotiations over a bilateral free trade agreement and expressed opposition to “the politization of economic cooperation,” including an “over-emphasis on security.”
Xi’s comment is almost certainly a reference to South Korean chipmakers, whose facilities in China face an uncertain future because of US export controls on advanced semiconductor technology. Chipmakers Samsung and SK Hynix in October received a one-year waiver from the US government to continue using equipment that contains American technology in their Chinese foundries, but they may need to eventually stop production in China or sell their operations there.

Building an Anti-Western Alliance

Despite the diplomatic outreach to the West, Xi is articulating a foreign policy framework called the Global Security Initiative (GSI) that is intended to counter US influence, oppose unilateral sanctions as a tool of foreign policy, and reject universal values such as democracy and human rights. Instead, GSI calls for “security for all” and posits that security alliances such as NATO and AUKUS are exclusionary, “zero-sum,” and ultimately lead to global instability.

Xi’s vision has some appeal to non-western or authoritarian countries that chafe at what they see as a “strings-attached” and condescending approach of Western economic aid and diplomacy, vice the Chinese approach that overlooks human rights abuses or poor governance.

Indonesia’s Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan recently told the New York Times that the Chinese “never, ever dictate” when making an investment, as opposed to the United States, which often sets onerous requirements before any investment is approved.
According to Western media, Xi is planning to visit Saudi Arabia to hold talks with Crown Prince Mohammed bin Salman before the end of the year. The two countries have been improving relations in part based on their agreement to respect each other’s internal affairs and deemphasize human rights issues.
Despite China’s public concern over the Russian threat to use nuclear weapons, China has refused to criticize Putin and continues to blame the war on NATO expansion. Xi’s GSI was launched in April 2022 and was in part a reaction to Russia’s invasion of Ukraine, as it seeks to blame NATO expansion for Russia’s actions.