US seeks recalibration, but China is unlikely to reciprocate

The virtual meeting between presidents Joe Biden and Xi Jinping was never likely to deliver a major breakthrough, but it does mark a significant recalibration in US policy, if not Chinese. That recalibration could be positive or negative for Australia’s relationship with China.

The big recent shift in US-China policy has been the rejection of “engagement” in favour of “competition”. The move began at the end of Barack Obama’s term and was formalised in the Trump administration’s embrace of “Great Power Competition”. Biden, who has continued many of Donald Trump’s China policies, began his term by promising “extreme competition”.

However, since then the administration has applied a series of progressively softer adjectives to “competition”. “Great Power” competition has been replaced by “strategic” competition.

Washington’s declared objective for the Biden-Xi meeting was to establish “guardrails” in order to “responsibly manage” competition. In his recent Lowy Institute lecture, National Security Adviser Jake Sullivan said Washington sought “effective and healthy” competition.

Beijing probably views Washington’s quest for stability as a sign of weakness.

When someone as intelligent and articulate as Sullivan uses such unclear language, it indicates a genuinely hard policy conundrum. On the one hand, the US sees China as an economic, military and even ideological threat that must be countered. On the other hand, it needs to cooperate with China on a range of global issues, crucially climate change. The modest outcomes from COP26 – including the vaunted US-China “deal” – have only underscored that need.

The more immediate goal is to prevent competition escalating into catastrophic conflict. Sullivan insists there is “no reason that competition has to turn into conflict or confrontation”. But it is not hard to imagine how growing brinkmanship over Taiwan could produce a dangerous miscalculation, especially given the apparent lack of a working hotline between the two sides.

There is, however, little evidence that China is also seeking guardrails to bound the competition. Xi has not reciprocated Biden’s interest in meeting in-person and he only agreed to the virtual link-up once Washington had shown willingness to compromise, most notably through the deal to release Huawei executive Meng Wanzhou.

Beijing probably views Washington’s quest for stability as a sign of weakness and it may suspect that “guardrails” is just code for maintenance of the US-dominated “status quo”. From Beijing’s perspective, it makes perfect sense that the Biden administration would eventually come to realise the need to cooperate with the emerging great power. Presidents Bill Clinton, George W Bush and Obama all promised to get tough on China before having similar realisations once they were governing.

As the US recalibrates its relationship, it will have to grapple with some tough problems, including where to compete, where to cooperate and how to maintain its commitment to avoid any linkage between cooperation on transnational issues and bilateral relations. And it will have to sell the concept of “responsible competition” to Beijing without feeding the perceptions of weakness.

The US-China relationship shapes Australia’s relationship with China more than perhaps any other factor. The resumption of US-China dialogue puts the absence of Australia-China talks in starker relief. The onus is on Australian diplomats to make themselves heard as Washington balances competing objectives.

Australia would benefit from a US approach to China that is less confrontational than Trump’s, and less accommodating than Obama’s. A “goldilocks” US policy would counter the security threats posed by China while creating more space for economic cooperation, including restored Australia-China trade.

But there is a risk that the opposite mix could emerge. Biden has shown himself to be a pragmatic dealmaker more primarily concerned with the big powers. A Biden-Xi accommodation could leave Australia at the pointy edge of security balancing but still frozen out of economic engagement. US promises that Australia wouldn’t be “left alone on the field” in the face of Chinese economic coercion have yet to translate into concrete action. And Biden’s recent announcement that the US would “explore with partners the development of an Indo-Pacific economic framework” lacks detail.

For these reasons, Australia should continue backing the collective approach to China to which Washington is, at least rhetorically, committed. That includes “minilateral” groupings, like the Quad and AUKUS, designed to balance Chinese power. But it should extend to larger, multilateral groupings that can establish rules of the road for international behaviour. Guardrails are a necessary but insufficient component of a more rules-based order.

But calls to defend the existing rules-based order are no longer enough. These calls reveal that the existing order is no longer fit for purpose. This is especially true in the Indo-Pacific, where development of regional institutions has not kept pace with the challenges.

More work is needed to build a regional order designed neither to exclude nor accommodate China, but which promotes prosperity, constrains power and is seen as legitimate. Pressing the US to join the CPTPP remains a central part of that effort. The fact that China now seeks membership of an agreement that Obama once described as necessary to prevent China from writing “the rules of the global economy” should help spur Washington to action. But more effort is also needed to reconcile the existing ASEAN-based regional architecture with the new groupings such as the Quad and AUKUS.