What (and who) we’re watching at APEC this week

Leaders from the 21-member Asia-Pacific Economic Cooperation (APEC) group have landed in San Francisco for the bloc’s annual summit of leaders.

1. The Xi-Biden meeting 

US President Biden and Chinese President Xi will meet later this morning (Wednesday) in their second face-to-face meeting since Biden took office. They don’t agree on much, but neither leader is in the mood for a fight right now:

• Xi is grappling with an inbox full of economic challenges at home as well as plenty of problems abroad (China currently has 14 border disputes with its neighbours).
• Biden is managing wars in Ukraine and the Middle East while suiting up for what’s sure to be a bruising re-election campaign at home.

So stabilisation suits them both. Beyond that, expectations for any meaningful outcomes are low, but here’s what we’re hearing:

• Both sides might agree to resume military-to-military contact and to keep AI out of certain weapons systems.
• China has already signalled it’ll crack down on the precursors for making fentanyl, and that it could agree to buy more American soy and aircraft.
• In return, the US might agree to lift sanctions on a Chinese security agency with alleged links to the repression of Uyghur Muslims.

2. The CEO summit

Leaders from Tesla, Microsoft, Exxon, and other corporate giants are also in San Francisco to rub elbows with world leaders.

Dinner with Xi (at $2,000 a pop) is the most coveted ticket in town, as companies look for reassurance after his recent moves (like a new data security law) further spooked the business community.

From Xi’s perspective, China needs to stem the outward tide of foreign investment, which means he faces the uncomfortable (and unlikely) prospect of loosening the economic reins a little. It’ll be interesting to see how positive (or otherwise) the US business community is after the meetings.

INTRIGUE’S TAKE:

We’ve had the good/mis fortune to work a few APEC summits in our former lives as diplomats. We say with confidence it’s the least sexy of the major forums, notorious for its endless texts, labyrinthine ‘working groups’, and questionable fashion choices.

But talkfests are important, particularly when they give a chance for the two most powerful men on earth to chat about big global issues.

For example, Biden will ask Xi to use his influence over Iran to make sure the latter doesn’t try to escalate the Israel-Hamas war (China is a big buyer of Iranian oil and therefore has considerable leverage over Tehran).

Along those lines, we think the real win would be both sides agreeing to resume military-to-military communication. World leaders have been urging Biden and Xi to put a floor under their relationship for years, and getting their two formidable militaries back to talking regularly would be an unsexy (it is APEC, after all) but important step in the right direction.

Also worth noting: 

• APEC is one of very few forums whose members include both China and Taiwan (which Beijing considers a renegade province). That’s why APEC statements tend to refer to ‘economies’ (not ‘countries’).
• Shortly before heading to San Francisco, Biden told reporters he’d consider his meeting with Xi Jinping a success if the two countries “get back on a normal course of corresponding”.
• Russia (also an APEC member) will be represented by a deputy prime minister and other senior officials not under US sanctions.