Taylor Swift is the go-to muse for Wall Street to define consumer spend or market volatility. Last week, a Goldman Sachs note trilled her hit track ‘All you had to do was stay’ as it asked investors to channel their inner Swift while equity and bond markets yo-yoed. Swifties are useful in illuminating geopolitics too. Swift’s hit single ‘Bad Blood’ could well be the anthem of fifty-plus years of US-China relations—mad love followed by bad blood.
Context, they say, defines and redefines events. The world is witnessing two wars—one in Ukraine and another in the Middle East. The global economy is wracked by rising cost of capital and falling growth. Constantly evolving definitions of national security are determining the flow of capital and trade. A glossary of phrases—decoupling, de-risking, offshoring, near-shoring and friend shoring—outline the contours of critical supply chains.
This week, US President Joe Biden met with Chinese President Xi Jinping in San Francisco. Between them the two nations account for $43 trillion or effectively over 40 percent of the $105-trillion global economy. The two questions the world seeks answers to are: will wolf warrior China wage a war to annex Taiwan and whether Xi has any credible plan to pull China’s economy out of what is the worst decline in decades.
The questions matter as their answers will determine the course of politics and policy. Consider the stance on the issue of Taiwan. Briefing the press, Biden stated that the US “stressed the importance of peace and stability in the Taiwan Straits”. When asked if Xi outlined the conditions under which China would attack Taiwan, Biden reiterated “there is a One China policy and that—and I’m not going to change that”.
Xi didn’t utter the six letter noun in public. However, he did present a friendly face at a dinner for “friendly organisations in the US”. Xi pledged “heart-warming” measures to make it easier for foreign companies and declared that “the next China is still China”. Perhaps the CEOs who attended the dinner—some of who paid $40,000 for a seat at the table of a person Biden publicly called a dictator—want to believe it.
Xi also made a wondrous claim at the dinner when he asserted that “since the founding of the People's Republic, China has not provoked a conflict or war, or occupied a single inch of foreign land”. Mind you, this is the leader who declared “we make no promise to renounce force” to annex Taiwan and under whose watch the PLA intruded into India and a map appropriated territory of six countries.
What may have enabled suspension of disbelief is a new growing belief in the US—particularly among corporates—that events unfolding in Taipei may alter the course of geopolitics. Taiwan’s two main opposition parties, Kuomintang and Taiwan People’s Party, which have vowed to restart talks with China, have come together to take on the ruling Democratic Progressive Party. Wall Street is perhaps betting that the coming together of the two parties may remove the potential flashpoint. The newfound subscription triggers two questions: what if DPP wins and what if the Chinese economy doesn’t revive?
There are though no guarantees in geopolitics. The province of geopolitics is located in the landscape of pragmatism, pretence, posturing and perfidy. It is instructive to track the timeline of events. In June 2021, US President Biden met with Russian President Vladimir Putin in Geneva. The US President “communicated the United States’ unwavering commitment to the sovereignty and territorial integrity of Ukraine”. Biden also said, rather presciently, “I’m not confident he’ll change his behaviour.”
In November 2021, two years to the week, US intelligence agencies briefed Western allies of Russia’s plans to invade Ukraine. In December 2021, the two leaders spoke for two hours on a video call when Biden warned Putin of sanctions if Russia invaded Ukraine. Putin demanded binding guarantees against NATO expansion. On February 4, 2022 Putin met with Chinese President Xi in Beijing where they announced a “no limits” friendship. On February 24, 2022 Russian forces entered Ukraine. The war has since roiled global energy and food supplies, displaced millions and claimed thousands of lives.
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There is no disputing that the jaw-jaw is useful to contain confrontation. It did produce three takeaways. They talked about talking. The two sides agreed to re-establish high-level military-to-military communication. China promised to cooperate in combating trade in illegal fentanyl which claims over 200 lives a day in the US. The promise is subject to the robust Reaganesque rule of trust but verify. Then there is the exotic element: the two countries agreed on the need to address the risks of AI systems and safety through talks. The allure of the vague aspiration begs the question: how exactly will regimes recognise risks in a domain that is yet evolving?
There is lip-sync on peace but, equally, there is also the hum of ‘Bad blood’. Biden summarised the meet in his characteristic style: “It is not all kumbaya”. The rah-rah which followed was more a celebration of status quo, contentment over containment of conflict. The outcomes illuminate the shadow of competing compulsions. As this column has observed, the powerful are also dependent.
(shankkar.aiyar@gmail.com)
The Third Eye / Shankkar Aiyar
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India