US-China 'financial decoupling' is gathering paces as two sides' rivalry hits stock markets. Image: iStock

China and the United States made progress in climate change and trade discussions on Thursday ahead of next week’s virtual meeting between the two countries’ top leaders.

The world’s two largest economies surprisingly released the US-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s at the COP26 climate summit in Glasgow. Both countries said they would recall their firm commitment to work together and with other parties to strengthen implementation of the 2015 Paris Agreement.

At the same time, US Trade Representative Katherine Tai said the Biden administration was gaining traction with China in talks over Beijing’s compliance with the phase-one trade deal signed between the two sides in January 2020. Tai said the US was weighing all of China’s shortcomings in the deal, including its lack of purchases of commercial aircraft.

Despite these positive signals, Chinese state media continued to urge the US to show more “sincerity,” which refers to the cancelation of tariffs imposed on Chinese goods and sanctions against Chinese companies, if it was genuine about peacefully coexisting with China.

In early September, US climate envoy John Kerry made his second trip to China this year, urging the country to do more to reduce greenhouse gas emissions. After having virtual meetings with Chinese Vice Premier Han Zheng and diplomatic officials, Kerry said he had told his Chinese counterpart that “climate is not ideological, not partisan, and not a geostrategic weapon.”

However, he was told by Beijing officials that climate change issues could not be separated from broader political disputes between the two sides.

On September 10, Chinese President Xi Jinping and US President Joe Biden held a 90-minute phone call and agreed to resume dialogue on a range of topics. Trade and diplomatic officials held several meetings last month but did not reach any agreements. On Wednesday, media reports said the two leaders would have a virtual meeting as soon as next week.

Although Xi did not attend the COP26 summit in Glasgow, the US and China unexpectedly released a joint declaration on their climate actions on Thursday.

US Trade Representative Katherine Tai said the Biden administration was getting traction with China. Photo: AFP / Susan Walsh

Both said they intend to cooperate on regulatory frameworks and environmental standards related to the reduction of greenhouse gas emissions in the 2020s and maximizing the societal benefits of the clean energy transition.

They will also convene a meeting in the first half of 2022 to focus on the specifics of enhancing measurement and mitigation of methane, including through standards to reduce methane from the fossil fuel and waste sectors, as well as incentives and programs to reduce methane from the agricultural sector.

The declaration showed that China-US cooperation was the only right choice, and that the two sides agree more than differ on climate change, said Xie Zhenhua, China’s special envoy for climate change.

Meanwhile, Tai said the Biden administration continued to talk and work with Chinese counterparts on trade issues and that progress was being made. However, Tai declined to predict an outcome while discussions were ongoing.

According to the phase-one trade deal, China must boost purchases of US goods by US$200 billion during 2020 and 2021, compared to 2017 levels. As of September 30, it had only reached 60% of the target, official data shows.

The climate and trade progress came after US National Security Advisor Jake Sullivan told CNN on Sunday that the US was not seeking a new Cold War with China, nor any political transformation in the country, but rather the US sought a system of peaceful coexistence.

“The goal here is not containment, it’s not a new Cold War,” Sullivan said. “It is rather a favorable disposition in which the US and its allies can shape the international rules of the road on the sorts of issues that are fundamentally going to matter to the people of our country and to the people everywhere.”

On Monday, the Global Times published an editorial entitled “The US must prove it no longer seeks to change China’s system.” It said Sullivan made such a statement because the US had failed to achieve its goal of transforming China.

National Security Adviser Jake Sullivan says the US is not seeking a new Cold War with China. Photo: AFP / Jim Watson

“Not pursuing to transform China’s system is a way for the US to shrink back from difficulties after acknowledging them,” it said. “We should ask the US to put that statement into action and reduce its political interference in China’s internal affairs.”

On Thursday, the state-run People’s Daily said in an article on social media that Sullivan seemed to have shown a friendly gesture to China, but he was actually saying that coexistence relied on fulfilling the values and benefits of the US and its allies.

It said Sullivan’s statement was more like a threat that urges China to follow the international order defined by US politicians.

Xin Qiang, a professor and deputy director of the Center for American Studies at Fudan University, was quoted as saying in the article that Sullivan had strategically released his statement as Biden wanted China to support his economic recovery, anti-epidemic and climate change policies.

Hubei-based political commentator Rong Ping wrote in an article on Thursday that it was unreasonable that Sullivan had urged China to take responsibility for climate and international trade issues.

Rong said the US started a trade war that eventually hurt itself. He said after former US president Donald Trump withdrew from the Paris Agreement, the US had done nothing about climate change apart from sending Kerry to China.

“China has survived the trade war and US’ sanctions against Chinese companies. How can the US now order China arrogantly?” wrote Rong. “China has contributed a lot and taken its responsibility. Apart from benefiting itself, when will the US take its responsibility as a superpower?”

On Tuesday, Biden said the US would continue a Trump-era ban to forbid US investment firms, pension funds and others from buying shares of Chinese companies that were designated by the Department of Defense as backed or associated with the Chinese military.

On the same day, a delegation of US Congress members arrived in Taipei on Tuesday on an unannounced visit aboard a US Navy aircraft. China’s Ministry of Defense accused the US of supporting Taiwanese independence forces.

Read: Xi, Biden call will have Taiwan front and center