More American companies are enmeshed in China than ever. Therefore, it is not surprising that the corporate community welcomed Monday’s bilateral summit between President Biden and Chinese leader Xi Jinping with open arms, particularly when compared to former President Trump’s China approach, which was mostly organized around a fusillade of tariff-centric Tweets.
Ironically, China is one of the few areas of agreement between President Biden and his predecessor. Both understand the domestic political upside of a “tough” on China approach. Yet, the tactics they choose to execute their respective strategies could not be anymore different.
Twitter provided Trump the unilateral flexibility he craved to engage China and was arguably his most effective use of the platform, giving him leverage to strengthen his trade-negotiating hand.
The take no prisoners tone that Trump employed online appealed directly to blue collar Rust Belt voters, who were key to his 2016 victory and who stuck with him throughout his time in office, believing he was reigning in China and would restore US manufacturing. It even achieved some policy success. Trump’s team ultimately negotiated an agreement that forced China to make actual concessions, a previous no no for any Chinese leader.
Fast forward almost two years and President Biden’s “tough” on China approach relies on traditional diplomacy, zero bellicose rhetoric, and no Twitter. “Intense competition” has replaced “ripped off”. Without a comparable political weapon to Trump’s Twitter, Biden’s affinity for process and the “long game” has robbed him of the domestic political potency of the China issue.
Not surprisingly, Monday’s summit between President Biden and Chinese leader Xi Jinping came and went quietly, playing to type, with both leaders repeating rehearsed soundbites tailored to specific political constituencies. The virtual setting meant even the usual diplomatic dance of seating arrangement and power signaling was toned down. While Biden has failed to capitalize politically on an almost identical policy approach, he is a huge hit with the corporate predictability markets.
US companies and investors today can more freely contemplate their China-related business decisions without the threat of Trump’s Twitter feed. This has created a far more stable business environment for US companies. Although there continue to be reports, such as the recently released US-China Economic and Security Review Commission annual report to Congress that calls for increased steps to limit commercial ties with China due to national security risks, US companies like consumer goods companies and financial services firms see the size of the China market as irresistible. They will continue their march into China.
For CEOs and Xi Jinping, Trump’s Twitter is exactly where it belongs.