U.S. Markets closed
  • S&P 500

    -29.13 (-0.73%)
  • Dow 30

    -305.02 (-0.90%)
  • Nasdaq

    -77.39 (-0.70%)
  • Russell 2000

    -21.63 (-1.19%)
  • Crude Oil

    +0.13 (+0.18%)
  • Gold

    +7.90 (+0.44%)
  • Silver

    +0.43 (+1.87%)

    -0.0014 (-0.1371%)
  • 10-Yr Bond

    +0.0760 (+2.18%)
  • Vix

    +0.54 (+2.42%)

    +0.0012 (+0.0980%)

    -0.0800 (-0.0586%)

    -61.83 (-0.36%)
  • CMC Crypto 200

    -4.14 (-1.02%)
  • FTSE 100

    +4.46 (+0.06%)
  • Nikkei 225

    +326.58 (+1.18%)

Lack of 'political consensus' limits Biden's options on China: Council on Foreign Relations president

China’s aggressive push to finalize international trade and investment deals in recent months threatens to derail the incoming administration’s key focus — building an alliance to keep China’s economic power in check.

As President-elect Joe Biden looks to repair U.S.-China relations tarnished by a bruising trade war and heightened tech tensions, Council on Foreign Relations President Richard Haass said the White House will have little leverage with Beijing, especially on economic issues.

“The administration I fear is in some ways going to limit itself. I don't see us getting into the Trans-Pacific [Partnership] trade agreement agreement, the CPTPP. I don't see them having the political consensus,” Haass told Yahoo Finance Live. “I'm not even sure trade is going to be at the forefront of what they're going to do.”

The options have largely narrowed as a result of Beijing’s recent moves, Haass said. In the two months since the U.S. presidential election, China has successfully forged a historic Regional Comprehensive Economic Partnership (RCEP) involving 15-member countries, a trade zone covering roughly one-third of the world’s economic output. That preceded an investment deal with the European Union, completed in the final weeks of 2020. News of EU-China discussions, which commits to giving European businesses better access to the domestic market, prompted a quick response from Biden’s pick for National Security Adviser, Jake Sullivan, who tweeted:

The Trump administration has repeatedly pushed allies to follow its lead, in reducing their economic and technological ties with China. But, it has seen mixed results, in part because of the economic potential the world’s second largest economy holds.

While Western countries have struggled to control the spread of the coronavirus and have been slow to bounce back from the economic fallout attributed to virus-related lockdowns, China’s economy has largely rebounded from the lows of the pandemic. The International Monetary Fund (IMF) now projects 7.9% growth, compared to 3.1% for the U.S.

With the coronavirus response and domestic policy a key focus for the Biden administration in its first 100 days, Haass said Biden should look to build out a ‘competitiveness strategy’ in its approach to China.

“I think that's going to be more of the administration's approach, doing more things here at home. Investing federal dollars defense production and so forth, and seeing if we can better compete here at home,” Haass said. “[The U.S. can] then take it to the international arena, for example, to put something on the field, that would take China on in the area of Belt and Road and its various permutations.”

Moves to pressure China, in the final days of the Trump administration are likely to complicate matters. Earlier this week, the New York Stock Exchange reversed course under reported pressure from the Treasury Department, to move forward with delisting three of China’s largest telecommunications companies, suspected of doing business with the country’s military, effective Jan. 11. Earlier this week, the Wall Street Journal reported the State and Defense Department was considering adding China’s most valuable companies, Alibaba (BABA) and Tencent Holdings (TCEHY), to the stock ban list.

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita