So when Washington and Beijing do economic battle, as they have for five years running, the rest of the world suffers, too. And when they hold a rare high-level summit, as Presidents Joe Biden and Xi Jinping will this week, it can have global consequences.
The world’s economy could surely benefit from a U.S.-China détente. Since 2020, it has suffered one crisis after another — the COVID-19 pandemic, soaring inflation, surging interest rates, violent conflicts in Ukraine and now Gaza. The global economy is expected to grow a lackluster 3% this year and 2.9% in 2024, according to the International Monetary Fund.
“Having the world’s two largest economies at loggerheads at such a fraught moment,” said Eswar Prasad, senior professor of trade policy at Cornell University, “exacerbates the negative impact of various geopolitical shocks that have hit the world economy.”
Hopes have risen that Washington and Beijing can at least cool some of their economic tensions at the Asia-Pacific Economic Cooperation summit, which starts Sunday in San Francisco. The meeting will bring together 21 Pacific Rim countries, which collectively represent 40% of the world’s people and nearly half of global trade.
The marquee event will be the Biden-Xi meeting Wednesday on the sidelines of the summit, the first time the two leaders will have spoken in a year, during which time frictions between the two nations have worsened. The White House has sought to tamp down expectations, saying to expect no breakthroughs.
At the same time, Prasad suggested that the threshold for declaring a successful outcome is relatively low. “Preventing any further deterioration in the bilateral economic relationship,” he said, “would already be a victory for both sides.’’
In 2018, the Trump administration began imposing tariffs on Chinese imports to punish Beijing for its actions in trying to supplant U.S. technological supremacy. Many experts agreed with the administration that Beijing had engaged in cyberespionage and had improperly demanded that foreign companies turn over trade secrets as the price of gaining access to the Chinese market. Beijing punched back against Trump’s sanctions with its own retaliatory tariffs, making U.S. goods more expensive for Chinese buyers.