When President Biden and Chinese Communist Party Secretary Xi Jinping announced their meeting at the recent G-20 meeting in Indonesia, punditry went into overdrive.
This was to be the first meeting between the two leaders since Biden became President. That they were meeting seemed positive, particularly to those who believe that jaw-jaw is better than war-war.
There was a bonus, since the two men “knew” each other and had met when both were vice presidents of their respective countries back in 2012.
But that meeting was a decade ago and the intervening years had produced a lot of changes. Both men were now Presidents, Xi rising to another level having secured an unprecedented third term as Party Secretary without any foreseeable term limit beyond that. The Trump years had intervened in the US and moved trade from a vigorous flow of goods from China and massive foreign investment by US business in China to a tariff-strangled, much reduced flow of goods, services, and investments between the two countries.
Covid struck worldwide, affecting trade and a global supply chain.
This was a new world order that the two Presidents faced. They had spoken on the phone a number of times, according to some reports as many as a total of 25 hours.
When the face to face meeting happened it lasted about three hours. Much was made of the length of the meeting, but it probably had a lot to do with the need for translation. President Biden does not speak or understand Mandarin. The level of Party Secretary Xi’s English is not known, though he likely has some English.
In 1985 Xi made a two-week fact-finding trip to the US, including an overnight stay with a farm family in Iowa. Add his 2012 visit to Washington D.C. including dinner with President Obama and a lengthier stay with the Bidens at the vice-presidential residence.
The subjects the two men discussed in Indonesia included China-US relations, recent tensions over Taiwan, and the war in Ukraine. More bullet points than deep policy dives.
Former Chinese Party Secretary Zhou Enlai’s oft-quoted definition of diplomacy applied in the view of skeptics: “All diplomacy is a continuation of war by other means.”
An earlier Communist Party Secretary, Josef Stalin, put in more bluntly: “Sincere diplomacy is no more possible than dry water or wooden iron.”
The first tip-off came when there was no joint communique as is traditional after similar meetings between world leaders. Instead, each side issued its own summary of positions taken.
Biden: The US does not seek to change China’s system;the US does not seek a cold war with China; the US does not seek to strengthen alliances against China; the US does not support “Taiwan independence,” “two Chinas,” or “One China, One Taiwan,” and has no intention of seeking conflict with China; and the US does not intend to break off ties with China, impede China’s economic development, or contain China.
Xi: China does not seek to change the existing international order; China does not seek to interfere with the internal affairs of the United States; China has no intention to displace or challenge the United States; China and the US should respect each other, coexist in peace, pursue win-win cooperation, and work together to ensure that China-US relations move forward on the right course without losing direction or speed, still less having a collision; and both sides should adhere to the three existing US-China joint communiques in order to manage differences and disagreements and prevent confrontation and conflict.
On the face of it the statements from the two world leaders seemed encouraging. According to Richard Haydarian, an Asian expert, Xi and Biden’s G20 meeting was a masterclass in de-escalation.
Other reactions from people involved in Washington State trade with China varied from “a good photo op, but no meaningful results” to “they talked past each other.”
A closer reading of the two statements reveals that the policy statements contained nothing new – new verbiage but no new policies – an oft-used outcome in the conduct of diplomacy.
Meanwhile, a hardening of lines between the two major powers has been going on for months. The US has withdrawn some of the more onerous tariffs imposed by the Trump administration, but at the same time the Biden administration has imposed export restrictions designed to slow China’s development of the chips that increasingly power the world economy.
Some have characterized this “chip war” as the real economic power battle of the future. The restrictions on Western tools to etch the increasingly sophisticated and demanding chips are defensive moves on what some perceive as China’s lead in Artificial Intelligence.
Another factor is the recent build-up of tension over Taiwan,notably when Speaker of the House Nancy Pelosi made her visit there and triggered Mainland Chinese military exercises around the Island. Not to mention the challenges of China’s Alliance with Vladimir Putin and his increasingly unsuccessful war against Ukraine.
Both Biden and Xi appear to have seen the need for a de-escalation of language.
Hence we got a restatement of policies that have been in effect, but couched in less confrontational language.
What does all of this mean for Washington State?
Trade between Washington State and the world, including China, was in trouble before President Biden met with Xi. In total exports, 2014 was Washington State’s best trading year as exports reached $80 billion ($93 billion today). By 2021 the state’s exports decreased to $41.1 billion dollars, a more than 50 percent drop when inflation is included.
What happened? Remember, the state’s biggest current export partner is only a few miles away: Canada. China had been Washington State’s biggest export market up to 2019. Trump tariffs, some continued into the Biden presidency, Covid, and worldwide supply chain disruptions plus the grounding of Boeing’s 737 MAX dropped China from first to third place. Canada and Japan rose to become the state’s biggest export markets.
It breaks down as Canada: $ 7.5 billion; Japan: $ 3.8 billion; China: $ 3.1 billion; followed by Mexico, South Korea, the UK, Taiwan, Ireland, Germany, and the Netherlands.
Boeing and its component suppliers in Washington are historically the biggest single source of the state’s exports (50-65 percent). Boeing is America’s number one exporter in terms of dollar value.
Washington agriculture comes next, almost 30 percent of the state’s export value in dollars. But here too tariffs have cut the value of agricultural exports well below the highs of 2014 in the pre-Trump and Biden years. Recently, figures for food and food products started to rise. More than 70 percent of the state’s potato crop is exported as frozen French fries, feeding the worldwide growth in fast food chains and the younger generations’ appetite for French fries.
Wheat is another important export, with 90 percent of the crop exported, though China’s $230 million value remains less than what Canada and Japan take. Washington State apples on dinner tables and menus in China have suffered cuts of 50 percent and more.
Shipping to China from the Seattle/Tacoma Northwest Seaport Alliance (in yellow) has been, as the chart of the top ten US Ports indicates, slow to recover and shows a slight drop between 2019 and 2020.
Given that 80 percent of consumer goods come into the US by sea, shipping delays last year meant that 65 ships were reported waiting their turn into the Seattle/Tacoma docks to load and unload. Waits then were calculated in months, but now delays have been reduced. Long Beach, the number one port on the West Coast, is down to a one-day delay. Arrivals into Seattle/Tacoma currently have a 9-day wait, the second longest delay among the top eight US ports.
Washington State universities draw 10 percent of students coming from China to study in the US. As Covid and other factors diminished the number of students coming between 2010 and 2020, the bottom dropped out in 2021, as seen in the chart.
The global supply chain remains disrupted, and even optimists think it will take well into 2024 and likely beyond to fix the delays.
Meantime if you are a Northwest traveler to China, either on business or as a tourist, the picture couldn’t be bleaker.
Pre-2019 there were half a dozen national and international carriers flying from Seattle to China, including multiple direct flights daily to Shanghai, Beijing, and Shenzhen, with more to come. Round Trip fares depending on the season were often less than $1,000, and flights were full in both directions.
Today only a few international carriers (no Chinese airline) will get you to China via Canada or Europe with connection times of up to 45 hours. And the fares? For economy, expect to pay $5,500 to $7,000. Business class fares can run as high as $20,000. And good luck finding a seat.