The polite way to characterize Joe Biden’s meeting with Xi Jinping is that it cleared a rather low expectations bar but failed to achieve any new heights for the globe’s most important relationship.

Yet the ways in which US President Biden and Chinese leader Xi left the summit in California’s Santa Cruz mountains, their first in a year, offers more insights than what the men discussed – or didn’t broach – in private.

Biden went to the microphones to spin his first meeting with the Chinese leader in a year as “constructive and productive” and “blunt.” Xi went to work — attending a high-stakes dinner with top CEOs who’ve recently grown skittish on investing in China.

The symbolism is clear enough. With one year to go before a bruising 2024 US election, dismal approval ratings and Moody’s Investors Services threatening a downgrade, global investors figure Biden has little left to offer Sino-US dynamics.

Besides, with geopolitical fires burning from Ukraine to Israel and Republicans at home trying to impeach him and jail his son, Hunter, few think Biden will have the bandwidth to pile on more China trade sanctions.

Indeed Biden doubling down in San Francisco on his earlier description of Xi as a “dictator” spoke to how hemmed in his options are by election-related atmospherics.

Only time will tell if the Xi-Biden meeting will “mark at least a near-term bottom in the structural decline of the US-China relationship,” observes Bill Bishop, a long-time China-watcher and author of the Sinocism newsletter.

The fact the meeting took place at all suggests a calmer period ahead for bilateral investment and trade relations. It also signaled a renewed willingness to attempt to move past the myriad fissures of the last 12 months.

Yet both sides are having to eat some disappointment. China must accept that the technology transfers from the US vital to taking the economy upmarket aren’t happening anytime soon.

Biden must accept that the 14-member Indo-Pacific Economic Framework that the US hoped would be a counterweight to China is stuck in first gear, at best. The IPEF’s gathering in San Francisco this week wrapped up with little more than a hollow communique.

For Xi, the CEO gathering was far more vital than the Biden meeting. For Wall Street and Silicon Valley, seeing the leaders of the world’s two biggest economies make nice, even just for the cameras, puts China Inc’s prospects in a different light. Just the headline that Xi and Biden restored military-to-military communications will comfort Western decision-makers.

Yet for Team Xi, the hard part has only just begun. Beijing’s policy blunders these last three years have taken a heavy toll, driving giant waves of capital out of Chinese assets. From draconian Covid-19 lockdowns to tech crackdowns to the re-emergence of state-owned enterprises as the economy’s main growth drivers, Xi’s street cred as a bold reformer is in tatters.

The charm offensive at Wednesday’s CEO dinner was an ideal chance to turn the tide. Attendees included bigwigs like Apple’s Tim Cook, BlackRock’s Larry Fink, Blackstone’s Steve Schwarzman, Broadcom’s Hock Tan, Pfizer’s Albert Bourla, Qualcomm’s Cristiano Amon, Visa’s Ryan McInerney and myriad other uber executives.

It was Xi’s moment to reassure chieftains that growth is stabilizing, Beijing is repairing the property sector, the clampdown on internet platforms is over, local government debt levels are being addressed, efforts are intensifying to champion private sector growth and Sino-US trade ties are getting back on track.

“China recorded a loss of US$11.8 billion in foreign investment in the third quarter and wants to stop the outflow,” says Dominic Chiu, analyst at Eurasia Group.

Chiu adds that for Xi the dinner with US corporate executives was a chance “to reassure stakeholders that China remains open for business.”

Odds are, Chiu says, Xi made “modest gestures on issues of concern to the US Chambers” but “it’s unlikely that anything fundamental will emerge regarding China’s views on data security or state industrial policy.”

Even more important, though, is that Xi’s inner circle “walks the walk” once back in Beijing. “Talking the talk” in San Francisco is a great start. But lowering the geopolitical temperature requires follow-through in Communist Party circles, just as any reset requires a recalibration of Biden’s policies in Washington.

But for Xi, the stakes are more immediate as Wall Street debates whether his economy is “uninvestable.” The good news is that Xi and Premier Li Qiang have been working behind the scenes to stabilize a cratering property market.

In the short run, this includes additional fiscal and monetary stimulus. In the longer run, it involves creating mechanisms to help developers get weak assets off balance sheets and reduce default risks.

“China’s property crisis remains a key risk for the economy as a whole, feeding through to consumer demand and investment while pressuring local government financing vehicles and increasing asset risks within trust products,” says Justin Patrie, analyst at Fitch Ratings.

“Policy support has increased since the summer, though there remains a high degree of uncertainty as to whether it will be sufficient to begin a recovery in the property sector,” he said.

The problem for Xi is that it’s been 12 months since his government unveiled a 16-point plan to fix the property market – and with little success so far in terms of implementation or results. (The 16-point playbook preceded Li’s arrival as premier in March.)

The plan includes: offering property loans for developers with sound corporate governance; allowing local governments to set “reasonable” down-payment thresholds and mortgage rate floors in a city-specific approach to improve demand; offering fundraising options to construction companies; allowing extensions on borrowings; supporting bond issuance by quality developers; and encouraging trust companies to provide developers funding support for mergers and acquisitions, rental properties and retirement homes.

Other steps involve offering special loans for property project completions; supporting acquisitions of property projects by stronger developers from weaker rivals; devising market-based approaches including bankruptcy and debt restructuring; creating more credible credit scoring systems; increasing fundraising for acquisitions; and diversifying fundraising for rental properties by growing the market for real estate investment trusts (REITs).

In July 2023, Li, then four months into the job, pledged to “adjust and optimize” policies to ensure the healthy and stable development of the property market, urging local governments to roll out measures to stabilize things.

The bottom line, notes analyst Rosealea Yao at Gavekal Dragonomics, is that Xi and Li “have not yet abandoned the aim to reduce the economy’s reliance on property over the long term.”

As such, Beijing has been reluctant to reopen the stimulus spigot as aggressively as in the past. The mechanics of this balancing act are playing out in real-time.

The next step, Yao reckons, “is likely to be a rollback of other housing-purchase restrictions in first-tier cities.” All told, she notes, “recent policy easing is likely to be enough to stabilize property sales at a low level and put transactions on course to decline.”

Yet, Yao adds, “it’s now fairly clear that the government’s bottom lines for property policy have shifted relative to the highly restrictive stance of recent years.”

There are still things the government is unwilling or reluctant to do because it is still committed to the goal of reducing the economy’s reliance on property over the medium and long term.

The current aim of policymakers, Yao notes, is probably to simply stabilize housing sales, which have steadily deteriorated since April and are dragging on economic growth. If transactions continue to weaken, officials are likely to deploy ever more aggressive steps to put a floor under the market.

This problem is not going away, a challenge highlighted by China slipping back into deflation in October. Core inflation, which excludes volatile fresh food and energy, dropped 0.6% last month year on year.

Such data add to “evidence of renewed economic weakness,” Capital Economics analysts wrioe in a note to clients. HSBC economist Erin Xin adds that the price trend “reflects uncertainty around the solidity of China’s recovery.”

It’s complicated, considering mainland retail sales recovered to 7.6% year-on-year in October, says economist Carlos Casanova at Union Bancaire Privée.

Yet news this week that Chinese home prices in October plunged the most in eight years can’t be ignored. They point to a worsening property slump that could negatively affect both inflation and retail sales.

The National Bureau of Statistics reports that new-home prices, excluding state-subsidized housing, in 70 cities fell 0.38% month on month. That was the biggest drop since early 2015.

“Property remains the biggest drag amid the rising credit risk among developers,” says Larry Hu, economist at Macquarie Group Ltd.

Such data also suggests that recent stimulus measures aimed at major cities around the nation over the last three months haven’t put a floor under a vital sector dragging on Beijing’s economic recovery hopes. Amid such uncertainty, there’s great value for Xi in putting the US relations on a firmer ground to reduce the risk of additional trade sanctions.

Some observers argue that concerns in senior Politburo ranks in Beijing are prodding Xi to do his part to ease tensions. Along with the weakest economy in 30 years, Xi is fending off “the impression among at least part of the Chinese elites that the most important diplomatic relation for China… is being mismanaged,” says Alicia Garcia Herrero, an economist at Natixis CIB.

Just about the only thing on which Biden’s Democrats and Republicans loyal to former president Donald Trump agree on is being tough on China. Xi may thus be hoping to equalize the Sino-US trade issue ahead of November 2024.

As economist Diana Choyleva at Enodo Economics adds: “Earlier in the year Xi was effectively blanking the US, convinced that any talks would gain nothing and only benefit the US.”

However, Choyleva notes, “It appears that a combination of an under-performing economy, the impact of US technology restrictions — which have undoubtedly slowed China’s technological progress, even if they have not been as successful as the administration had wished — and growing diplomatic isolation has persuaded him of the need for a tactical pause.’’

Biden may be eyeing his own tactical pause. Slowing growth, the US national debt topping US$33 trillion and the specter of losing Washington’s last AAA credit rating mean the US needs all the foreign investment it can get. And with $860 billion worth of US Treasury securities, Beijing isn’t without leverage points versus Washington.

While hardly a game-changer, events in San Francisco may offer both Biden and Xi face-saving ways to tamp down global headwinds and signal their economies are back in business. That’s particularly true of Xi’s team, which just made a timely sales pitch to the biggest of the globe’s big money.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek