China Beige Book CEO Leland Miller joins Yahoo Finance's Kristin Myers to break down the latest from the first U.S.-China meeting under President Biden.
KRISTIN MYERS: Now, of course, that big question remains about where we go from here between the United States and China. So I want to bring in Leland Miller. He's the CEO of China Beige Book to talk more about that. So Leland, I do want to know your thoughts on essentially the acrimony that we saw between both of those sides yesterday. As I mentioned, it was supposed to just be a four minute photo op, and it became an hour long, I would call it a diplomatic slugfest. How did you perceive the comments?
LELAND MILLER: I'm going to break with consensus here and say that this is exactly what should have been expected. There was, as you've already mentioned, no potential for breakthrough. The Biden team right now doesn't have any interest in sitting down and figuring out what negotiation leverage and concessions it's willing to levy at China. So right now, what both sides needed from a domestic standpoint for their domestic audiences was to look tough.
So the United States comes out and says, look, we're a democracy. You're not a democracy. You're doing terrible things. And China comes out and says, you know, we're getting stronger. You're getting weaker. And look at all the inequality you have in your society. So the fact that they were going at each other I don't think should have been a surprise at all. This is the two trying to play to their domestic audiences and show that, you know, they're ready for some stiff competition the next four to eight years.
KRISTIN MYERS: So then where does that relationship go from here? Now that both sides have made that appeal to their audiences back home, where does it go in terms of working either with each other or coming to some sort of consensus or agreement, especially because we do have that US-China trade deal never really totally completed?
LELAND MILLER: Yeah, well, I mean, there's a couple of things here. So I mean, first of all, the Biden team is going to have to figure out over the coming months what components of the Trump strategy it wants to keep and which ones it wants to do away with or tweak. And so it will have to figure out what happens with tariffs over the next year and what happens with export controls and other things. You know, these will be important. But the Biden administration is in no rush for this, nor should it be. So right now, there's really nothing for the Chinese to do, except wait for the United States to come out with a more explicit strategy.
You also, of course, have Congress working on a larger trade sort of China, anti-China, tough on China bill hitting all parts of the relationship. They're hoping to get that done next month. So the Chinese are going to have to figure out what Congress is going to toss at it, what room for leverage it has with Biden. But there's nothing right now, and until the COVID recovery is-- as soon as a real recovery from COVID, I don't think you're going to see Biden in a hurry to craft out these priorities.
KRISTIN MYERS: So then are you saying that we might not see, which is such an almost an about face from the reality that we had not too long ago, although it feels like years ago when we were talking about the US-China trade deal almost every single day, are you saying that this might be put on the back burner, definitely not for 2021, maybe not until 2022, once we've put the pandemic in the rearview?
LELAND MILLER: Well, look, whether or not you were in favor of applying tariffs on China in the first place, there's a very weak rationale for just ripping them off at this point. So I think with the way that the White House looks at it is, we're going to stay the course. We have to be tough on China politically, or we're in big trouble in the midterms next year. So we have to have a tough on China policy. Maybe we don't love tariffs, but the Chinese better give us something to take some of these things off, which it's a political sensitivity, and there's no reason we're going to make life easy for them.
KRISTIN MYERS: Leland, you were talking about that hard line that President Biden is going to be taking, moving forward with China. And you were mentioning how you don't anticipate that tariffs are going to be going away any time soon, which I do find interesting, especially since we had seen President Biden criticizing those tariffs, of course, prior to him ever taking office.
LELAND MILLER: Yeah, I think that the issue is not whether he or anyone else supported the terrorists in the first place, but whether there's a rationale for just ripping them back and giving China what would be a pretty big political and geopolitical victory. And I think that's the way the White House looks at it. So these will be chips in a future negotiation. They're not things that the White House is looking to do right now.
But again, as it gets into future policy pushes with, you know, say, Iran or North Korea and it needs China's help more now-- more then than it does now, then I think then you're going to start seeing a much bigger discussion about the tariffs.
KRISTIN MYERS: Now China failed to purchase the agreed upon amount of goods last year as a part of that phase one deal that had been struck with the Trump administration. Of course, we are still very much in the midst of a pandemic. I'm wondering if you think that China might essentially start to ramp up those purchases in an effort to move things forward with the United States.
LELAND MILLER: Yeah, I think right now, because not doing so would be a political vulnerability for it. It still wants to see whether there's any room for maneuver in terms of the tariffs or in terms of restrictions against tech giants or Huawei specifically. So I think that the Chinese are going to want to play ball so long as they think that there's some wiggle room down the road.
They understand that the Biden administration is in a very tense political situation in terms of what it can and can't do in terms of negotiations with Beijing. But I think as long as the option remains open, then they're going to try to play ball and mostly adhere to the deal where they can.
KRISTIN MYERS: I want to dive into that a little bit more, especially because the last time that everyone was talking about the US-China trade deal, a lot of time was spent on discussing how China essentially perceived the United States negotiating position. I'm curious to know how you think that the Chinese are perceiving that negotiating position. I know you're saying that President Biden is in a bit of a tense spot. And I'm also curious to know if you think that the Trump administration essentially has created a position of strength for the United States moving forward.
LELAND MILLER: Well, this is the great irony of the Trump years. There are certain things he did, which are creating enormous amounts of leverage for the Biden team with China. On the other hand, there's a lot of, you know, wounds with allies and friends that need to be healed.
So I think when the Biden team took office, you know, a couple of months ago, and they said, look, we need to really unify the coalition that's going to be pushing back on China and get that healed and get that back on a stronger footing, but at the same time, a lot of the policies that Trump put into place, they're putting us-- they've put us in a pretty good position because if we take them away, then that's a chit that we'd give to the Chinese, and we want something back. So if Biden plays this right, he's got a lot of leverage with Beijing right now.
KRISTIN MYERS: All right, Leland Miller, China Beige Book CEO, thanks so much for joining us for this conversation today.