U.S. President Joe Biden, shakes hands with Chinese President Xi Jinping, left, before the start of their face-to-face bilateral meeting on the sidelines of the G20 Summit, November 14, 2022, in Bali, Indonesia.
MERICS China Essentials
14 min read

G20 + Real estate market + Zero-Covid

In this issue of our MERICS China Essentials, we cover the following topics:

  • Xi signals willingness to reengage with the West, with limits

  • Beijing gives stressed real-estate sector some breathing space

  • China relaxes zero Covid – investors applaud, but citizens are torn

  • Allies in Europe and East Asia lukewarm about US chip restrictions on China

  • The Cashless Revolution: China's Reinvention of Money and the End of America's Domination of Finance and Technology, by Martin Chorzempa

Xi signals willingness to reengage with the West, with limits

The G20 Summit in Bali was the setting for a momentous meeting between US President Joe Biden and Chinese President Xi Jinping – the first in person since Biden took office and just after the Chinese Communist Party’s 20th Congress at which Xi secured a norm-breaking third term as party head. The meeting delivered one positive outcome: reopening the lines of communication between the two countries. The hope is that renewed communication will stop deterioration of US-China relations and prevent an unintended escalation of tensions. But it won’t resolve any longstanding friction points.

This summit could set the tone for China’s foreign policy over the next few years. Confident in his renewed power and authority and without fear of looking weak, Xi is signaling some willingness to engage with the US and other powers in a more constructive fashion, albeit with clear limits. Noticeably, Xi did not meet with Indian PM Narendra Modi during the summit, likely due to an unwillingness to compromise on their border dispute. China’s relatively low-key participation in the simultaneous COP27 in Sharm el-Sheikh, with Special Envoy Xie Zhenhua leading the delegation and Xi skipping the conference, also indicates that geopolitical competition and China’s relations with the US will remain a top priority. As a result, there is a risk that cooperation on global issues like climate change could be sidelined.

Absent any real common ground, the meeting between Xi and Biden was largely a platform to deliver messages to the international community and a restatement of well-known positions. Likely a message for Russian President Vladimir Putin, the US government highlighted in its briefing that both presidents confirmed their opposition to the threat or use of nuclear weapons in Ukraine. But this point, which also arose during Xi’s recent meeting with German Chancellor Olaf Scholz, was not mentioned in the Chinese readout, a further indication that it was meant for an international audience and does not signify a shift in Beijing’s position. While it is notable that Xi mentioned this in the talks, rejecting the threat or use of nuclear weapons is part of China’s longstanding nuclear doctrine. The comment was likely seen by Beijing as a low-cost way to appear constructive in the international arena. 

Media coverage and sources:



This is the estimated daily shortfall in iPhone production at the world’s biggest Apple contract factory, run by Foxconn in Zhengzhou. Tight Covid-19 restrictions have analysts forecasting a 30 percent drop in iPhone output in the near term. In late October, Foxconn confined 300,000 workers to its Zhengzhou campus to contain a Covid outbreak, causing droves of panicked workers to flee for fear of food shortages and medical-care problems. Video clips showing workers hiking out of the city went viral on social media. As a result, Foxconn offered bonuses to encourage workers to return to work. (Sources: Reuters, Business Insider, CNN)