Op-Ed: China’s Xi Jinping seeks advantage over Biden with ground-breaking EU investment deal

Chinese negotiators this week stunned their European Union counterparts with key market entry concessions – following lengthy months of intransigence — that might enable the 2 events to achieve an settlement on a historic investment deal by 12 months's finish.

Though EU officers haven't but revealed the main points, one senior EU diplomat mentioned the settlement goes past something Beijing has provided any international accomplice beforehand, regarding each the extent of market entry and authorized and different ensures.

EU officers aren't naïve concerning the deal's historic timing or political significance. It would come shortly after Americans elected Joe Biden in early November, following a marketing campaign throughout which he pledged to rally allies in Europe and Asia to work in frequent trigger to counteract the unfair practices of China's authoritarian capitalist system.

In Brussels, Beijing's rush to shut the investment settlement follows the European Commission's proposal on Dec. 2 to President-elect Biden for "a new transatlantic agenda for global change" that has at its coronary heart nothing lower than the ambition of bringing collectively Europe and the United States as a worldwide alliance based mostly on shared values and historical past.

EU officers that I reached on Friday mentioned they had been torn between the chance to shut among the best investment agreements ever on supply with China and the need to grab the early days of the Biden administration to dramatically enhance transatlantic relations. Should the EU shut the deal with China, they’re prone to argue to the Biden crew that the concessions they gained from Beijing can even utilized to any future U.S. agreements with China.

That mentioned, the underlying message of President Xi's to President-elect Biden, paraphrasing the Rolling Stones' hit 1974 single, is that "Time Waits for No One."

 Xi isn't keen to hit the pause button to supply President Biden time and area to assemble his China crew, attain out to allies, and body his technique. He gained't accomplish that on commerce and investment, nor will he accomplish that in his efforts to crack down on political dissent at house. He is shifting quickly to realize higher self-sufficiency in creating key applied sciences, notably semiconductors. And he’ll head off any efforts that will impede his ambition to unify Taiwan with the mainland throughout his management.

It's clear that President Xi regards 2021, the centenary of the Chinese Communist Party, as maybe an important 12 months since he got here to energy in 2013. He regards the last decade forward as decisive.    

Nothing may have made President Xi's private ambitions clearer than the Fifth Plenum of the Central Chinese Committee, which concluded on October 29, simply 5 days forward of the U.S. election.

"Judging by the Plenum's outcome, Xi's political ambition to remain in power for the next 15 years looks increasingly secure," mentioned Kevin Rudd, former Australian prime minister, in a must-read speech as president of the Asia Society Policy Institute. Rudd sees the 2020s because the "make-or-break decade for the future of Chinese and American power."   

President Xi Jinping's rush to shut the EU investment deal is only one amongst many components of his evolving, pre-emptive strategy towards the United States basically and President-elect Joe Biden extra particularly, with components that vary from commerce initiatives around the globe to escalating actions towards pro-democracy activists in Hong Kong and actual or perceived dissidents at house.

Seen most charitably, President Xi is hoping to incentivize the Biden administration to extra cooperatively negotiate comparable agreements with Beijing. It had been a long-desired Chinese aim, earlier than the worsening of relations in the course of the Trump administration, to attain a so-called BIT – or Bilateral Investment Treaty – with the United States, akin to what’s being negotiated with the EU.

Seen much less generously, Xi is boxing within the Biden administration lengthy earlier than the Jan. 20 inauguration by locking its closest democratic allies into investment and commerce agreements to which Washington isn't celebration. Regarding human rights points – together with this week's arrest of a Bloomberg journalist  and the jailing of newspaper founder Jimmy Lai and different Hong Kong democracy activists – he's signaling that at this time's China will resist President-elect Biden's anticipated efforts to focus on human rights points.  

President Xi shouldn’t be solely leveraging the long-standing business sights of his nation's almost 1.4 billion customers. He's additionally cashing in on China's vital success at getting COVID-19 underneath management. That, in flip, will enable China to be the world's solely main financial system to publish development this 12 months, at some 1.5-2 %, with a shot at double-digit development subsequent 12 months.  

The information from Brussels follows final month's announcement that 15 member nations of the Association of Southeast Asian Nations and regional companions – together with China however not the United States – had signed the Regional Comprehensive Economic Partnership, or RCEP, one of many largest free commerce agreements in historical past. It is the primary time that China has come collectively with U.S. allies South Korea and Japan in such an settlement.

 Beyond that, President Xi has expressed curiosity in becoming a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The settlement was negotiated with the United States in the course of the Obama administration, however President Trump pulled out of the talks, lengthy earlier than their 2018 profitable conclusion, as one among his first acts as US president.

For all his willpower to reinvigorate relations with allies, President-elect Biden has mentioned that commerce agreements gained't be a precedence. There stays an inadequate constituency for them amongst Republican or Democrat lawmakers.

As all the time, it will be mistaken to underestimate China's challenges, and they’re many.

Among them are doubts concerning the Chinese financial mannequin, notably as President Xi tightens his controls over the non-public sector, together with the latest blocking of the ANT preliminary public providing. China's return to development this 12 months has been pushed principally by the state.

There are rising indicators that President Xi's most bold worldwide effort, the Belt and Road Initiative, is in hassle. Chinese officers are quietly reigning in its ambitions — they usually face stress to reschedule or forgive money owed owed by poorer nation companions.

It's additionally not clear whether or not nationwide self-sufficiency efforts will shut remaining expertise gaps, notably with regards to semiconductors. The Trump administration heightened tensions this week, placing China's largest chip maker and drone maker on an export blacklist, requiring U.S. firms to get licenses to promote to them.

Whatever issues President Xi might have, he emerges from 2020 stronger than anybody anticipated when the coronavirus broke out in Wuhan late final 12 months. In President-elect Biden's inaugural 12 months, it might be President Xi's actions which can be most price watching.     

Frederick Kempe is a best-selling creator, prize-winning journalist and president & CEO of the Atlantic Council, one of many United States' most influential assume tanks on international affairs. He labored at The Wall Street Journal for greater than 25 years as a international correspondent, assistant managing editor and because the longest-serving editor of the paper's European version. His newest e book – "Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth" – was a New York Times best-seller and has been printed in additional than a dozen languages. Follow him on Twitter @FredKempe and subscribe right here to Inflection Points, his look every Saturday on the previous week's prime tales and traits.

For extra perception from CNBC contributors, comply with @CNBCopinion on Twitter.

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