Biden needs balance and engagement in Asia with China

Asia Europe World

Author: Editorial Board, ANU

Responsible adults are back in the White House. President Joe Biden sent a clear message in his inauguration that his priority is to heal a divided United States of America. He went on to immediately sign a series of executive orders including one that has the United States rejoin the Paris climate agreement.

A TV screen shows news of US President Joe Biden after his inauguration, in Hong Kong, China, 21 January 2021 (Photo: Reuters/Tyrone Siu).

A TV screen shows news of US President Joe Biden after his inauguration, in Hong Kong, China, 21 January 2021 (Photo: Reuters/Tyrone Siu).

So begins the hard yards of repairing America’s international standing and undoing the damage from four years of Donald Trump’s America First agenda. The United States didn’t just vacate global leadership for four years but was itself a source of uncertainty and instability. The domestic sources of America First persist with inequality and division magnified by failure to manage the response to the COVID-19 pandemic.

Whether Mr Biden and his administration can reclaim global leadership while attending to America’s great domestic fractures is still a question.

The biggest challenge on the international stage will be managing the China relationship. The United States has never faced a big power rival like China that already has a larger economy by some measures and is deeply integrated into the global economy.

China policy under President Trump — to be tough on China, frame it as a strategic rival and start to decouple the economies — had a large measure of bipartisan support. Secretary of State-designate Antony Blinken emphasised continuity on China policy in his senate confirmation hearings. But there will be differences. Where a Biden administration will differ most is on how it engages allies and partners in its strategy.

The Biden administration is starting to reveal its thinking on China and Asia policy. Kurt Campbell, Mr Biden’s ‘Asia tsar’ and the architect of President Obama’s Asia pivot (later rebranded the Asia rebalance), has outlined a strategy of working with allies to curb China’s assertive behaviour and restore balance and legitimacy to the Asian order. This is a welcome departure from the Trump administration that undermined alliances.

Mr Campbell’s strategy reveals two important gaps that are difficult to address yet. How will the United States engage China directly, and how will the coalition of allies and partners work with both the United States and China?

Any engagement between China and the United States involves spillovers for the rest of the world. Mr Trump’s transactional, bilateral, divide and conquer approach to foreign policy led to the phase one trade deal with China that eschewed multilateral trade rules and norms. The deal involved significant negative spillovers for the rest of the world as it diverted Chinese trade away from others like Australia towards US goods and gave special access to US companies in China that unilateral US sanctions had cut out for competitors from other countries.

The United States will need to find a way to engage China to pursue its global interests — from climate change to global economic governance — that avoids damage to the rest of the world. The global community needs to push China and the United States towards settlements in multilateral settings.

Mr Campbell suggests using an alliance of democracies or coalitions of the willing to counter Chinese assertiveness and curb Chinese behaviour. He will find many willing partners. But if those coalitions do not include engagement with China on win-win or positive sum issues like trade and investment, the willing partners will be fewer.

Few countries will have much appetite for being forced into a choice between China and the United States, a strategy that Mr Trump’s secretary of state Mike Pompeo pursued overtly. China is much too important to many countries around the world for their economic and political security. It will become more important as a source of recovery from the pandemic and to East Asia in particular after the conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement.

Mr Biden’s advisors are already finding the balance a challenge, letting it be known they are unhappy with the European Union for concluding an investment deal with China before the Biden administration was in place. National Security Advisor Jake Sullivan tweeted: ‘The Biden-Harris administration would welcome early consultations with our European partners on our common concerns about China’s economic practices’.

Asia tsar Campbell went further in his Foreign Affairs article suggesting that Europe is out of step with the Indo-Pacific approach because ‘distant European leaders are inevitably less concerned about China’s assertiveness than the Indo-Pacific states next door’ and ‘China used last-minute concessions to successfully pull the EU into a major bilateral investment agreement despite concerns that the deal would complicate a unified transatlantic approach under the Biden administration’.

In this week’s lead article, Shiro Armstrong and Evgeniia Shannon argue that the Comprehensive Agreement on Investment (CAI) between China and the European Union is ‘a positive development’ and ‘makes clear that Europe will not sit quietly on the sidelines without pursuing its own strategic interests’ in the tussle between China and the United States.

It’s not just Campbell and Sullivan. ‘The CAI is being portrayed in Western media as a strategic victory for China over a naive, desperate Europe’, Armstrong and Shannon point out. ‘Europe’s leaders, critics argue, are limiting options for the Biden administration and giving too many concessions to China with little hope it will honour its commitments’.

China will be locked into more rules and markets through RCEP and the CAI, and, Armstrong and Shannon explain, that ‘significantly raises the costs of Chinese unilateral behaviour that contravenes those agreements’. That is something the United States should welcome.

If the CAI comes into force, the European Union will succeed in locking in major Chinese reforms and concessions, some of which extend beyond those that European investors will enjoy. Chinese investors in Europe will gain certainty while European hosts can still screen investments for security purposes.

Chinese President Xi Jinping has also signalled interest in joining the Trans-Pacific Partnership, which would require fundamental reform to state-owned enterprises for any chance at Chinese membership. Chinese reforms and opening up are unequivocally good for China and also for the global community.

America under Biden will take on the China challenge with other countries but unless it finds ways to engage China that don’t damage the interests of allies and finds a way to give allies and partners space to engage with China on reasonable terms, it may find America First will become America Alone.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.