Council on Foreign Relations Fellow for International Political Economy Zongyuan Zoe Liu joins Yahoo Finance Live to discuss the major takeaways from President Biden's meeting with Chinese leader Xi Jinping, the outlook for increasing Taiwan tensions, and what comes next for U.S.-China relations.
- This morning, President Biden met with China's president, Xi Jinping, in person for the first time since taking office. Here's what he said about the US's relationship with China. Take a listen.
JOE BIDEN: We're going to compete vigorously. But I'm not looking for conflict. I'm looking to manage this competition responsibly. China and the United States should be able to work together where we can to solve global challenges that require every nation to do its part.
- And joining us now to weigh in is Council on Foreign Relations fellow for international political economy Zongyuan Zoe Liu. Great to have you here this morning. First and foremost, when you think about the relationship that now needs to move forward between US and China and where we could potentially find some footing between the two heads of each country, Biden and Xi Jinping, where do you believe those conversations can actually starts right now?
ZONGYUAN ZOE LIU: Yes, thank you very much for having me. It's a great pleasure to be here. I think reading for-- in particular reading from the White House press release, we can get two major agreement between the two leaders from the meeting. One is they agreed to empower two senior officials on both sides to maintain communications and maintain the conversation.
And more specifically, they agreed that Secretary of State Blinken will visit to China to follow up the discussion. And then secondly, the two leaders also reiterated their agreement with regard to they do not want a nuclear war in the context of Russia, Ukraine-- Russia's war against Ukraine. So these are two major agreements to continue the conversation, and more importantly, to try to address a major global geopolitical conflict. And more going forward, the low-hanging fruit between US and China to resume the conversation would be, first, climate change and, second, food security.
- Well, and it sounds like on the climate change front that the two parties have agreed to restart climate talks, which is a positive step in that direction. With this seeming rapprochement, right, and on the items that you mentioned, does that make it less likely now that China will make some kind of new move in Taiwan?
ZONGYUAN ZOE LIU: That's a great question. I would offer cautious warning against any assumption thinking that China would change its position with regard to Taiwan because President Xi-- Party General Secretary Xi Jinping has reiterated China's position on Taiwan during his address at the 20th Party Congress, which has been consistently China or the Chinese party and as well the Chinese government policy with regard to Taiwan all the time, which is that China does not promise to relinquish the use of the force on the issue of Taiwan. So I would offer cautious warning against any wishful thinking that China would change its current position with regard to Taiwan.
- In terms of relationship building, what do you think is next here?
ZONGYUAN ZOE LIU: Next year, I think there probably will be three major changes towards the positive side, which is probably China will gradually relax its zero-COVID policy, meaning international flights will resume, meaning international people to people exchanges will get started again. This is a good sign.
And then secondly, since the two leaders, Biden and Xi Jinping, agreed that Secretary of State Antony Blinken will visit to China to continue the conversation, probably details will follow after the G20 meeting and high level conversation between the two countries will resume. That is another good sign. And then thirdly, and which is also a good forum for international business and the investors who are seeking to go into the Chinese market, which is China will continue to welcome international business, and in particular international investors with technology, expertise.
And the day after the party's congress, actually, China already put in particular the NDRC, National Development and Reform Commission, put out its specific guidelines, welcoming international business, giving favorable visa situations and all that. So these are the three major signs in favor of international business and China's returning to global business.
- The semiconductor space and industry has been the most reactive or sensitive to any intellectual property movements between the US and China. Do you believe that there will be some material change that comes as a result of relations improving after these talks initially?
ZONGYUAN ZOE LIU: This is another great question. Again, I'm not particularly optimistic about material changes specifically with regard to US export control in semiconductor technologies and of key manufacturer tools. And the reason is because it is in America's-- it's a part of the core of America's current industrial policy as well as America's national security interest, which is trying to contain China's technological advantage, and more specifically trying to contain China's indigenous development capacity at home.
And that is the core where US and China do not necessarily find that easily out. However, China would still trying to find alternative ways to have access to advanced technologies, specifically in the semiconductor industry. And part of China's effort would be looking into market players in South Korea, in Japan, and in Germany. I would say probably China's best chance would be seeking help from South Korea.
But recent Germans blocking off China's investment in Elmo shows that probably there will be a relatively stronger alliance against China seeking of a technological development advantage between the United States and its European allies.
- Interesting. We'll continue to track that very closely. Obviously, it's had a big effect on US semiconductor companies and stocks as well. Zongyuan Zoe Liu, thank you so much. Council on Foreign Relations fellow. Appreciate it.