Chinese President Xi Jinping met Russian President Vladimir Putin virtually on Friday. In February 2022, Chinese President Xi Jinping announced a strategic partnership that they said was aimed at countering the influence of the United States. Weeks later, Russia invaded neighboring Ukraine, a move that likely caught China’s senior leaders by surprise.
China’s Russia policy will serve as an impediment to improving US-China relations in 2023. China’s easing of its pandemic policy will create opportunities for US-China re-engagement, but it’s unclear whether both sides can find an impetus to improve relations.
China initially viewed Russia’s invasion of neighboring Ukraine as testing the strength of the existing US-led world order. China views the current US-led or rules-based world order as its dominant geopolitical threat.
US-China relations in 2023 will be defined by how both the United States and China manage the severe economic headwinds threatening to plague the two largest economies in the coming months. The United States continues to grapple with persistent inflation and domestic political instability. China continues to grapple with structural economic headwinds rooted in an expiring investment-led development model and unfavorable demographic shifts.
We’ll be paying close attention to China’s economic stimulus through the first two quarters of 2023. Where monetary policy drives stimulus in the United States and much of the developed world, we anticipate fiscal and macro-prudential policy to do much of the heavy lifting in 2023.
US-China Relations
Antony Blinken discusses US-China ties with incoming Chinese foreign minister Qin Gang (South China Morning Post)
US Secretary of State Antony Blinken spoke with Beijing’s ambassador to Washington Qin Gang before the Chinese diplomat’s departure from the US to take up his new post as foreign minister.
Just days after Beijing confirmed Qin’s elevation, Blinken said that he discussed the US-China relationship and “maintaining open lines of communication” in his phone call with Qin.
Geopolitics
US-China Rivalry May Shape 2023 for the World (Bloomberg)
The great competition between the US and China—which only intensified in 2022—will likely be the most important theme of the coming decades, longtime global economy watcher Stephen Jen has rightly said.
With that in mind, we look-ahead to 2023 by focusing on three important dynamics underlying the rivalry. Two relate to where the rest of the world positions itself on the field, and the third analyzes where China itself is heading after a year of weak economic growth.
Xi and Putin Meet Again, Two Strongmen in a Weak Moment (New York Times)
When China’s top leader, Xi Jinping, and President Vladimir V. Putin of Russia declared a “no limits” partnership 10 months ago, the pair projected an aura of strength in a direct challenge to the United States and the West.
As the two leaders met again on Friday via video, they found themselves in positions of weakness, encumbered by geopolitical and economic threats to their informal authoritarian alliance. Both now have little room to maneuver, making the relationship all the more important, albeit also a lot more complicated.
China Economy
Hong Kong Property Expected to Recover on China Border Reopening, Finance Chief Says
Hong Kong Financial Secretary Paul Chan said he is optimistic about the city’s economic prospects for this year and expects the local real estate market to rebound after the China border reopens.
Hong Kong’s exports, tourism and local service industry are all expected to rebound on China’s border reopening, and consumption in the first quarter is likely to rise significantly from a year earlier, Chan wrote in his blog on Sunday.
Photo by Wolfgang Hasselmann on Unsplash