Will Xi and Biden mend US-China relations at the APEC summit?

As the Asia Pacific Economic Cooperation (APEC) summit begins in San Francisco, all eyes will be on the meeting between Presidents Xi Jinping and Joe Biden as China and the United States try to stabilise relations damaged by trade and security concerns.

The leaders of the two world powers will meet on Wednesday for a more than four-hour meeting on the sidelines of the summit and will have dinner with Silicon Valley chief executives.

Rising tensions between the two countries – including on tariffs, semiconductor chips, surveillance and China’s increasing militarisation in the South China Sea – have meant that US companies have looked to expand or move their China-based businesses to Mexico, Southeast Asia, India and even back in the United States over the past few years.

Biden and Xi have not met since the G20 summit in Bali in November 2022. The APEC summit provides an opportunity for them to meet “and neither side have to worry about the optics of overly accommodating the other in the initiation of the meeting and the meeting venue,” said Chong Ja Ian, associate professor at the Department of Political Science at the National University of Singapore.

China and the US have worked to find agreement in two areas, drugs and climate change. Media reports said that at the summit, China is expected to announce a crackdown on fentanyl sales to the US and both countries plan to increase renewable energy.

The goal on the US side will be to “keep temperatures in the Asia-Pacific as low as possible”, said Rana Mitter, ST Lee professor of US-China relations at the Harvard Kennedy School. With wars in Ukraine and Gaza, the United States “has no desire for a third war front”, Mitter said.

For China, which is hoping to stimulate a sluggish economy, the goal is to “relieve technology restrictions”, Mitter said.

This month, China reported outflows of foreign direct investment exceeded inflows for the July-September quarter, a first since 1998. This reversal comes on the back of US restrictions on the Chinese semiconductor industry as Washington is concerned its chips could be used for military purposes. Chip companies have shifted those investments to the US, India, Malaysia and Singapore, Nikkei Asia reported.

Other companies such as Apple have looked to expand in India. Mexico has received investments in manufacturing and Vietnam and Cambodia in cellphone and textile manufacturing.

“It will be hard to find a comfortable resting place between the two right now,” Mitter said.

‘Pitch to attract investment’

Silicon Valley CEOs have been major investors in China. Apple partner Foxconn makes most of its cellphones in southern China, and Tesla became the first foreign company to have a wholly owned business in China to make cars.

However, the Chinese government’s crackdown on its own tech CEOs and foreign executives has led to concerns among US companies.

“When foreign executives see other executives being called up by the government, they are concerned. For business, it is all about transparency,” said Sean Randolph, senior director at the Economic Institute of the Bay Area Council, a San Francisco based think tank.

With the Chinese economy slowing, Xi will look to allay such concerns at his dinner with Silicon Valley executives and attract new investments. While his meeting with Biden is likely to remain largely behind closed doors, he is expected to make a speech at the business dinner.

“Xi will make a pitch to attract investment in the PRC [People’s Republic of China],” Chong said. “But CEOs may be less interested in pitches and more interested in whether their employees get detained, their offices get raided and books get additional scrutiny, they have to surrender proprietary information, there is adequate intellectual property protection and they can move their capital out of the PRC when necessary.”

In the past, as the Chinese economy quickly grew, the San Francisco Bay Area was a recipient of Chinese investment in real estate and tech startups, Randolph said.

Those investments have fallen since 2017, the year Xi last visited the US, as the Chinese government imposed capital controls and more recently the US government launched several investigations into Chinese investments in the country.

“Our investments in China are now flat and venture capital investment is down,” Randolph said.

Xi did not leave China during the COVID-19 pandemic for more than two years and has travelled sparingly since then, including skipping this year’s G20 summit in New Delhi. For his trip, both China and the US prepared extensively for the Xi-Biden meeting even though the visit seemed uncertain until recently.

Cleaning up San Francisco

The summit will be a showcase for the city of San Francisco, often a subject of media coverage for its growing homeless population and drug abuse. City authorities have conducted sweeps of unhoused people for weeks ahead of the summit. UN Plaza, home to many homeless people and substance users, has been cleaned up ahead of the summit.

In the past few days, bands played there, and there were a dance competition and laser light show.

“We hope to continue this in the months to come,” said Fernando Pujals of the Mid-Market Business Association, which helped organize the events.

Close by, on Market Street, there was an archival photo installation that celebrated the area’s history, including the earliest Pride parades to women’s rights marches.

This tradition of protests carried on for the APEC summit despite the tight security for the event.

Nik Evasco joined thousands of protesters on Sunday protesting a range of issues that will come up at the summit, including the presence of oil company CEOs at talks on climate change; the attendance of Philippine President Ferdinand Marcos Jr, whom the demonstrators accused of human rights abuses; and Israel’s bombing of Gaza. Among them were also Free Tibet protesters, whose demonstrations could dampen Xi’s visit.

Evasco said protesters planned to “shut down” the summit on Wednesday.