President Biden met with Chinese President Xi Jinping at APEC this week to discuss a range of topics, including the economy, fentanyl, and re-establishing channels of communication, according to a White House readout. Representatives from Beijing claim Xi pressed Biden about export restrictions of certain technology. Ambassador Kurt Tong, The Asia Group Managing Partner, joins Yahoo Finance to discuss the meeting between the world leaders and how the countries could move forward on a new path of beneficial communication as global events develop.

Tong explains how this new communication can be beneficial to both economies, especially in finding areas where the two countries can find agreement, using the events in the Middle East as an example. "I think it's in the interest of both the US and China that the situation in the Middle East not expand to become a broader conflagration that would limit energy exports and create real instability in the global economy. That's an interest for China, it's an interest for the United States and so perhaps, through communication, we can encourage China to play a somewhat more constructive role in that region."

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Video Transcript

AKIKO FUJITA: This was clearly a very choreographed meeting. And this wasn't just about playing to the US audience as well as those executives that had been attendants of the APEC CEO summit, it was also about playing to a domestic audience for Xi Jinping at a time when the slowdown has happened, right? There's still growth happening in China. It's not at, sort of, the 8% level that we saw previously.

How would you assess where the economy is right now? I mean, how jittery is the footing for China? And ultimately, what does that mean for Xi Jinping in managing the country?

KURT TONG: Absolutely. I think there's deep concern in Beijing about the state of the macro economy, a reassessment of its strengths and weaknesses, and a real sense that for China to continue to grow at a reasonable level to meet its development goals, it's going to need to accommodate foreign interests to a greater extent than its political system would naturally do. Political system is geared to be exclusionary, top-down control based, and highly politicized. None of those are good features for an open and successful market economy. So we are feeling that there's a sense that there's a re-injection of this sense within China that the market needs to be treated with respect.

Now, that's going to be the devil's in the details. It's going to be extraordinarily difficult for foreign firms, as well as Chinese firms to navigate through a complex environment. But there is a renewed sense just in the last few months that China needs to recalculate the degree to which it was prioritizing security over economics.

RACHELLE AKUFFO: And Kurt, I have to ask you, because we've seen a lot of reshaping alliances, whether it was over how China's perceived interactions with Russia over its invasion in Ukraine, a lot of advanced technological pressures as well, especially we're seeing the US getting Australia, getting the EU on board as well. How does the reshaping of alliances affect what we see with multinational companies who are still interested in China, but this is a very different Chinese economy?

KURT TONG: So businesses want to be left out of the conversation about issues like what to do about the Israel situation, about Ukraine. But they do get caught up in it when sanctions come into play and when there are specific political actions that affect markets. In the US-China relationship, the government sense, I think there was an important conversation yesterday of trying to find points on which the US and China agree.

For example, I think it's in the interests of both the US and China that the situation in the Middle East not expand to become a broader conflagration that would limit energy exports and create real instability in the global economy. That's an interest for China. It's an interest for the United States. And so perhaps, through communication, we can encourage China to play a somewhat more constructive role in that region.