A thaw is in the air, but Chimerica isn't coming back.
I love that China is investing in carrier navy tech right at the end of the carrier era. It's exactly like Imperial Japan being obsessed with having the best battleships at the time when battleships has become obsolete.
Re: climate change. China built more wind and solar in the first 9 months of 2023 (415 TWh) than *the sum total* of every nuclear plant under construction (408 TWh). And yes, these numbers have already been adjusted for capacity factor. As a result, China's CO2 output is expected to begin a structural decline as soon as next year . Simultaneously, China has launched a new plan to pay coal operators to operate at < 50% capacity, with the majority of their revenue coming from these payments by the later part of this decade . They're also hugely ramping up on battery production.
I don't want to seem overly optimistic here -- they're still going to be emitting a lot of CO2, but I think "China isn't going to do anything about climate change" might actually be wrong in this case. It's also not hard to notice that these massive buildouts will do a lot to secure the country's energy supply in the event of a major Pacific war.
Noah, I think your take on Xi as making promises in the realm of coal and fentanyl and then doing nothing is spot on. There is no one better at shuffling his feet than President Xi.
"Even if building new solar would be a little bit cheaper than operating those existing coal plants in the long run, it would require lots of up-front costs, displace lots of workers from their existing jobs, require many factories that depend on coal inputs to retool, and deprive many local CCP members of their personal fortunes."
The same logic applies to pretty much every country that has a fossil fuel extraction industry. As the recently released 2023 Production Gap report notes:
"Major producer countries have pledged to achieve net-zero emissions and launched initiatives to reduce emissions from fossil fuel production, but none have committed to reduce coal, oil, and gas production in line with limiting warming to 1.5°C." Or even with 2°C!
Just because solar/wind/batteries are lower cost and lower carbon doesn't mean that countries will rush to adopt them. We have to keep finding ways to increase their share.
One large waste of time is breathlessly anticipating that breakthroughs will happen at summits. Breakthroughs at summits are about as rare as the birth of triplets (pre-IVF). Summits like the Reagan-Gorbachev summit at Reykjavik, where the principals came close to a breakthrough agreement on nuclear arms reductions come once a decade. And indeed, the Reykjavik Summit changed nothing in the long run.
When world leaders get together to hash out a major shift in policy, they stay together for days or weeks as has happened several times at Camp David.
XI and Biden are getting together for just a few hours, not 10 days. Yet, because we are not robots these short face-to-face meetings are still very important. They are extremely valuable so that both sides can get a sense of each other. You might say, Biden and Xi have met before, but that was last year. People change in ways they do not realize themselves from year to year and that slight change in energy or emotional state can only be picked up in person.
I think that we all realize by now that you can see things face to face that you cannot see pick up through zoom or a phone call. In fact, it is the second and third meeting between world leaders that is more valuable than the first, because two or three data points are far more valuable than one. Good antennae can tell whether anxiety, energy level, and confidence are going up or down.
If XI and Biden sense that they will be able to make any significant shift in the relationship of the US and China going forward, they will agree it to explore it further in phone calls and meetings between the appropriate ministers.
Nevertheless, the media will breathlessly pick over the entrails of this meeting to discern whether the two powers are moving toward détente or intensified hostility. This is an absolute a waste of time.
Both countries have established geopolitical aims that are at odds, and neither has any reason to abandon their position. Xi’s aims are somewhat contradictory: he wants to maintain robust trade relationship with the US while frightening Taiwan into a peaceful surrender to his unwelcome advances. Biden has made US policy abundantly clear: maintain strong trading ties with China while roping off a few segments of the economy from Chinese involvement. The US also continues its policy of strategic ambiguity to deter China from a military invasion of Taiwan. It remains to be seen whether Taiwan has the nerve to maintain its quasi-independence or end the tension by giving into China’s advances.
Prediction: The media will predict that this is a summit of rapprochement, because for the moment XI is stressing Chinese economic recovery over its long-term geopolitical aspirations. This was signaled a few days ago by a Chinese trade negotiator who emphasized China’s desire to workout tensions in the US China trade relationship in a meeting with Janet Yellen.
Prediction: Biden will not be fooled by this for a second—neither should you.
For more thoughts on US China relationships see my substack: https://kathleenweber.substack.com/p/its-hostile-its-real-but-dont-call
As a bit of an aside, this caught my eye (excerpted from Greg Ip):
"...the U.S. shipbuilding industry, despite a century of protection, has less than 1% of world capacity…"
"Despite", or "because of"?
"Ironically, Trump could probably get away with being much more conciliatory toward Xi, because he would be insulated by his reputation as tough on China." Not just that, it would be in keeping with his isolationist and deal-making preferences while it'd also allow the GOP to take the anti-Dem position on foreign policy on both Taiwan and Ukraine. Not just detente, we might have a complete turn of events.
The reason why China seems accomodating to US is pretty obvious. Their economy is in sharp decline and the demographic bomb (aging population, low fertility rates) is ticking quite fast. The very fact that China is seeking "detente" with several countries at the same time (ie. Australia, Lithuania, the EU, Japan, etc...) is a good illustration of this situation. So the "detente" with the US is not an isolated case. It is a coordinated effort by the CCP to stabilize its international environment in order to buy time and recover. That in itself is not bad at all. We in the West also need a pause and some breathing space. However, it would be foolish to believe that we are reaching a comprehensive agreement with China or that Cold War 2 is over. This is only but a temporary truce. China will use this moment to enhance its domestic and international posititon. The US should do the same by strengthening its domestic institutions and enhancing its alliances across the globe. We are in a long game so we'd better prepare ourselves. Cold War 1 lasted four decades, and Cold War 2 has just begun.
China is concerned about the decline of FDI? An attempt to attack and takeover Taiwan would send FDI off a cliff. That’s long-term damage to an economy that is ailing. Money has to flow somewhere. My guess is it would flow to the South Asian countries which are already strengthening their economies and ties to Western business. The resulting economic moat would isolate China. Does Xi want to make the same mistake as Putin? One hopes Xi understands this, but his judgement is already in question. He may fall on his own sword.
I’ve long been of the opinion that China fundamentally lacks the stomach for war in general, let alone with the United States. They might have lots of shiny new stuff, but I don’t see it being used in anger, or even really in earnest, very soon.
AFAICT, the last time China went seriously to war was against Vietnam in 1979. China hasn’t engaged in military operations even on the scale of the war against ISIS since then. Its shows of force, while certainly common in places, all take place within a few hundred nautical miles maximum of mainland China. That’s a terrifying deficit of combat experience versus the relatively battle-hardened professionals of the NATO militaries.
I could still be wrong, and I’d never venture an actual prediction of what might happen tomorrow, much less in 20 years, but I’m sticking with that opinion.
Noah.... thought experiment or more.
I give you Harry Potter's Wand.
What would would you craft as an ideal (non political as you do) optimization solution set matching up China and the US macro economys?
Strengths to weaknesses. QOL improvements.
I realize that's a narrow bounded set, as EU, Asia, Africa, SA all have important economies. But simplified start..
But maybe it could help the US become just a little more intelligent in our policies, like, for example, trying to win back a greater share of Chinese students, some of whom will decide to stay, narrow the focus of trade restrictions to "strategic" imports.
OTOH, except symbolically as a good-will gesture, we do not need Chinese support for the US position in the COP talks because our position and the premise of the whole COP framework -- getting countries to agree to quantitative targets for CO2 emissions reduction rather than quantitative targets for policies that reduce CO2 emissions -- is mistaken.
The redeeming factor of authoritarian regimes is that there is a finite lifespan built around the authoritarian. Once complete, hopefully the system will recover itself... unless there is a more systemic problem that remains unaddressed.
But of course in any conflict, the first item that is compromised are the facts. Facts are how one rallies support and undermines the opposition.
while we can analyze and try to predict the reasons and meanings of this meeting, we could also picture the alternative outcome should this meeting not happen.
Xi will be painted as more isolated and dangerous by western media and further alienate any remotely friendly foreign capital, and Biden will risk damaging his differentiating, deterrence thru engagement policy toward China in the upcoming election. The downside of not meeting outweigh the downside of a meeting without substance. communication without concession hurts no one. hence why not.
Xi isn't one to visit outside of his sphere of influence, and the visit appears to be as impromptu as a Xi visit could be, and oddly occurs on the heels of Newsome's visit. The question is: What does Xi want? And the answer is: We don't know, and it probably isn't about China's economy, because I don't think that Xi gives a damn about his economy. There's a lot we don't know, and that we will not know.