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A Glimmer of Hope in the Middle of a Dark Tunnel

U.S. President Joe Biden and China's President Xi Jinping meet on the sidelines of the G20 Summit in Nusa Dua on the Indonesian resort island of Bali on November 14, 2022. SAUL LOEB / AFP

By Lukas Fiala

As someone working on international affairs in today’s world, it’s rare to end the week on an optimistic note. Yet, sometimes even the darkest of times offer a glimpse of hope. Chinese President Xi Jinping’s return to in-person diplomacy and the de-escalation efforts by Washington and Beijing at the G20 summit in Bali, signaling the willingness of the two major powers to at least talk to one another, may just give us some reason for cautious optimism.

After Nancy Pelosi’s visit to Taiwan in August pushed the bilateral relationship to new lows, the Biden-Xi meeting in Bali and talks between U.S. Defense Secretary Lloyd Austin and his Chinese counterpart Wei Fenghe in Cambodia signal a desire to reinstate regular dialogue mechanisms. The latter is crucial to fostering mutual understanding and taking steps toward managing strategic competition. With a worsening debt crisis, climate change, and global instability exacerbated by Russia’s war, where are we to start?

The first step should involve recognizing mutual interests and finding a common language to discuss them. As we have written before, economic and security policies that foster stability across sub-regions of the Global South are the closest thing to positive sum cooperation we can achieve. Just this week, for instance, China granted greater tariff-free access for nine more African countries, the second wave of trade liberalization since September. The policy covers around 8,800 items as China seeks to boost African imports in line with promises made at the last Forum on China Africa Cooperation (FOCAC) in Senegal last year. This can be beneficial for both sides, giving African exporters access to China’s vast domestic market while helping to rebalance China’s current account (even if on a small scale).

Yet, China’s recent trade policy also holds valuable lessons for the larger context of U.S.-China relations. In the wake of the party congress and Xi’s much-anticipated report, many of us speculated about China’s inward turn during Xi’s third term. A slowing domestic economy, an isolated society due to zero-COVID, and a growing push to decouple technologically from the U.S. would accelerate the Party’s ambition to become more self-sufficient and reduce incentives to avoid painful transition costs. With Xi surrounded by ‘yes-men’, an isolated China would be harder to work with diplomatically.

The rise to prominence of the Global Development Initiative (GDI) – announced in September 2021 – in the party congress report and the relative marginalization of the BRI in a separate chapter on new development seemed to support the somber picture painted by Xi Jinping of an external environment that renders it much more difficult and risky for China to engage internationally.

What the above example demonstrates, however, is that China’s commitments across the Global South go beyond one policy document. They are interlinked with China’s increasingly complex relationship with many regions around the world, each of which has its own cooperation platforms and associated goals and timelines for working with Beijing. In this context, the GDI’s emphasis on sustainable development thus signifies the importance China still attaches to its relationship with African countries and the developing world at large. While hoping for cooperation between the US and China is premature, mutual interests at least help to find a common language to talk about policy issues including trade reform and global debt restructuring.

For instance, the GDI fits within China’s apparent push to reframe its development policy from large-scale public lending to a more fine-tuned and environmentally sustainable model. As the China-Global South project reported on Wednesday, China Exim Bank, one of China’s two main policy banks, announced a partnership with the Singaporean real estate investment firm ARA for a one-billion-dollar infrastructure fund targeting sustainable energy, telecommunications projects, and other low-carbon transportation initiatives in the ten member states of the Association of Southeast Asian Nations (ASEAN).

While China will certainly continue to use economic statecraft to advance its interests in the region, initiatives such as the GDI create space for the US and their allies to press Beijing on putting money where their mouth is. Similarly, growing scrutiny of Chinese lending in turn puts the West’s dismal alternatives and inability to formulate a sizable challenge to China’s BRI and GDI in sharp contrast. The latter comes with plenty of fancy policy slogans in the realm of climate security, the environment, and inclusive development.

What governments need to do now is push Beijing for concrete definitions of and commitments to sustainability and inclusivity. This will ultimately foster the kind of common language needed to navigate the competitive coexistence of the decades to come.

There is certainly plenty to be pessimistic about in global politics, from yet another round of ‘kicking the can down the road’ at COP27 to lethargic attempts to establish a workable ‘new normal’ in U.S.-China relations. But occasionally, we may indulge in looking on the somewhat brighter side.

Lukas Fiala is the project coordinator for the China Foresight initiative at LSE IDEAS

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