WRAPUP 4-China will 'eat our lunch,' Biden warns after clashing with Xi on most fronts

(Adds quotes from White House, Chinese tabloid editor, expert)
* Biden, Xi speak for first time since U.S. election
* Xi cautions against confrontation

By David Brunnstrom, Alexandra Alper and Yew Lun Tian
WASHINGTON/BEIJING, Feb 11 (Reuters) - U.S. President Joe
Biden and his Chinese counterpart Xi Jinping held their first
phone call as leaders and appeared at odds on most issues, even
as Xi warned that confrontation would be a "disaster" for both
nations.
While Xi has called for "win-win" cooperation, Biden has
called China America's "most serious competitor" and vowed to
"out compete" Beijing.
On Thursday, Biden told a bipartisan group of U.S. senators
at a meeting on the need to upgrade U.S. infrastructure the
United States must raise its game in the face of the Chinese
challenge.
Biden said he spoke to Xi for two hours on Wednesday night
and warned the senators: "If we don't get moving, they are going
to eat our lunch."
"They're investing billions of dollars dealing with a whole
range of issues that relate to transportation, the environment
and a whole range of other things. We just have to step up."
The White House said Biden emphasized to Xi it was a U.S.
priority to preserve a free and open Indo-Pacific, a region
where the United States and China are major strategic rivals.
He also voiced "fundamental" concerns about Beijing's
"coercive and unfair" trade practices, as well as about human
rights issues, including China's crackdown in Hong Kong and
treatment of Muslims in Xinjiang, and its increasingly assertive
actions in Asia, including toward Taiwan. White House spokeswoman Jen Psaki said Biden also expressed
concern about China's lack of transparency over the coronavirus.
All the rights issues Biden mentioned were ones Beijing has
explicitly told his administration it should stay out of.
Xi told Biden confrontation would be a "disaster" and the
two sides should re-establish the means to avoid misjudgments,
China's foreign ministry said. Xi maintained a hardline tone on Hong Kong, Xinjiang and
Taiwan, calling them matters of "sovereignty and territorial
integrity" he hoped Washington would approach cautiously.
The call was the first between Chinese and U.S. leaders
since Xi spoke with former President Donald Trump last March 27,
nearly 11 months ago. Since then, relations between the world's
two biggest economies have plunged.
Trump blamed China for starting the COVID-19 pandemic and
launched a series of actions against China, including a trade
war and sanctions against Chinese officials and firms considered
security threats.
Xi congratulated Biden on his election in a message in
November, even though Biden had called him a "thug" during the
campaign and vowed to lead an international effort to "pressure,
isolate and punish China." LINE OF COMMUNICATION
The Biden administration has signaled it will maintain
pressure on Beijing, and has endorsed a Trump administration
determination that China has committed genocide in Xinjiang.
At the same time, it has pledged to take a more multilateral
approach and is keen to cooperate with Beijing on issues like
climate change and persuading North Korea to give up its nuclear
weapons.
Biden has stressed the relationship he established with Xi
when vice president under Barack Obama, through more than 24
hours of private meetings and 17,000 miles of travel together.
On Thursday, he said he had a good conversation with Xi and
knew him well. However, a senior administration official told
reporters ahead of the call Biden would be "practical,
hard-headed, clear-eyed" in dealings with Xi.
At the same time, the official said, Biden wanted to ensure
they had the opportunity to have an open line of communication.
Chinese officials have expressed some optimism bilateral
relations will improve under Biden and have urged Washington to
meet Beijing halfway.
Readouts of the call from both sides mentioned areas for
potential cooperation, honing in on climate change and fighting
COVID-19.
China's foreign ministry said Xi had quoted back to Biden
the U.S. president's saying that "America can be defined in one
word: Possibilities."
"We hope the possibilities will now point toward an
improvement of China-U.S. relations," it quoted Xi as saying.
The editor-in-chief of the Chinese Communist Party-backed
tabloid, the Global Times, said in a tweet the fact that the
call lasted two hours was "a very positive message" that showed
"in-depth communication." Bonnie Glaser, an Asia expert at Washington's Center for
Strategic and International Studies, said there was room for
cooperation, but differences were wide.
"The concerns highlighted by President Biden are in essence
all Chinese core interests. So narrowing differences is going to
be very challenging," she said. "Xi did not suggest that there
are preconditions for bilateral cooperation on issues such as
climate change, so that is one positive takeaway."
Another CSIS expert, Scott Kennedy, said that while Xi had
proposed extensive bilateral exchanges, things would take time,
given Biden's plans for a thorough review of strategy.
"We may end up not far from where things are now, in terms
of overall tone, but it's also possible the two sides will find
a pathway to stabilize their relationship, both the extent and
manner of competition as well as areas of cooperation," he said.
A U.S. official said Washington was in a position of
strength after consultations with allies and partners to lay out
concerns about China's "aggressive activities and abuses."
He said the administration would look in coming months at
adding "new targeted restrictions" on sensitive technology
exports to China and also that there would be no quick moves to
lift Trump administration tariffs on Chinese imports.