Senior executives at US-based companies whom Beijing believes may be able to influence Washington’s China policy should be able to travel to China on business more easily despite the country’s strict COVID border policies. This window is likely to remain open until Beijing sees additional evidence of the US’s hardened stance. Such a sign may emerge soon: a US-led boycott of next year’s Winter Olympics was mooted a few days after the summit. If Washington endorses the measure, expect a backlash against brands from the US (and any country that joins it) as ordinary Chinese consumers are swept by anti-America and anti-West sentiment.
Overview
US President Joe Biden held a video talk with Chinese President Xi Jinping on November 15 that lasted more than three hours, against the backdrop of a worsening relationship between the two countries. While the leaders reached consensus in a limited number of areas (e.g., they agreed to hold nuclear “stability talks” to reduce the risk of conflict), their official statements following the meeting made clear that the two sides remain at odds on several fronts. Neither the US nor China showed willingness to provide openings on thorny issues, such as trade, tariffs, and Taiwan.
Our View
Open dialogue between the US and China at the highest levels may temporarily stop bilateral relations from deteriorating further. However, it’s still too early to expect real progress. Meaningful changes to policies that most concern MNCs will take time because: 1) the two sides will likely have to hash out details on working levels, and 2) China remains unconvinced by the US’s rhetoric and will need to see material policy shifts before taking additional steps. Even so, Beijing may see the recent opening as an opportunity to lay the groundwork for policy shifts through engagement with business leaders.
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