| The U.S. began preparing in earnest for a new American president this week, and so did China. In a congratulatory message sent to President-Elect Joe Biden, Chinese President Xi Jinping emphasized the need to maintain "healthy and stable" ties, while working to "manage differences." While a Chinese foreign ministry spokesman did congratulate Biden two weeks earlier, this recognition from Xi marks the start of official communication between the two administrations.  Photographer: Tim Rue/Corbis Historical Photographer: Tim Rue/Corbis Historical There is a notable complication, however. President Donald Trump's time in office has eight more weeks to run and his administration is reportedly mulling a number of steps against China before his term ends. They include sanctions on China's biggest chipmaker, a more aggressive stance in the South China Sea and barring U.S. investments in a growing list of Chinese companies. As noted by James Stavridis, a Bloomberg Opinion columnist and former supreme allied commander of NATO, a quickly rolled out series of new measures by a lame-duck administration looks less like a bid to achieve long-term American objectives than an effort to limit the options of the incoming president. It was always going to be difficult for Biden to roll back policies implemented under Trump, given the growing bipartisan calls for a tougher U.S. stance on Beijing. The risk is that action taken in the waning days of Trump's administration precipitates a fresh round of tit-for-tat retaliations. A new crisis for a new president is not what the relationship needs. Vaccine RolloutIt was reported this week that Sinopharm, one of China's leading vaccine developers, has submitted an application seeking approval to provide its Covid-19 shot for general use. A greenlight would make it the first publicly available immunization outside of Russia, vaulting it ahead of vaccines being produced by Western companies such as Pfizer, Moderna and AstraZeneca. But even before that approval comes, it has become increasingly clear that those with the right connections in China can get themselves vaccinated. That's because Beijing approved vaccines produced by Sinopharm and other Chinese developers for emergency use months ago. Meant for frontline workers, such as doctors and nurses, the vaccines have nonetheless found their way onto a growing black market for the shots. In addition to raising safety concerns, the situation also highlights how inequality looms as a major challenge governments around the world will have to tackle when the distribution of vaccines beings. Hong Kong Hong Kong needs China, maybe now more than ever. That appeared to be the message Chief Executive Carrie Lam tried to convey this week during her annual policy address. The city's economy has been battered for the better part of two years, first by unprecedented street protests and then by Covid-19. Lam presented greater coordination with mainland China as the antidote to those ills. She touted the Greater Bay Area concept, which increases integration of Hong Kong with the cities of Shenzhen and Guangzhou, as a panacea for growth, while also noting that Beijing would help the city secure coronavirus vaccines. Critics were quick to accuse Lam of wanting to further erode the city's autonomy. But with all of Hong Kong's opposition lawmakers having resigned this month, and the imposition of a national security law having clamped down on unrest, Lam's vision of closer mainland ties seems to have fewer roadblocks -- for now at least.  Japan RelationsChinese Foreign Minister Wang Yi this week became the first senior official from Beijing to visit Japan since Yoshihide Suga took over as prime minister. The trip showed relations are good enough for the neighbors to collaborate, with the two sides agreeing to lift some Covid-related restrictions to ease travel between them. But there are also disagreements. Wang, for example, discussed their long-running territorial dispute over islands in the East China Sea with both Suga and Japanese Foreign Minister Toshimitsu Motegi. Other sources of tension exist as well. In October, Japan hosted a meeting of foreign ministers from the Quad countries, which also include the U.S., India and Australia. Beijing sees this group as an alliance aimed at containing China's rise. Suga this month also signed a security agreement with Australian Prime Minister Scott Morrison, which angered Beijing. It was unclear, however, if Japan's participation in these alliances came up during the course of Wang's trip. Debt ProblemsDebt was in the news again this week with corporate defaults in China exceeding the 100 billion yuan mark. That makes 2020 the third consecutive year the country has surpassed that threshold. Beijing has clearly decided to pull back the hand of the state when it comes to debt obligations, even if the firms are government owned. Doing so produces obvious benefits. Markets that can direct loans to borrowers without interference should be better at channeling money to companies that are well-run and innovative, while guiding it away from those that aren't. There are some signs this is already happening. A number of companies rated AAA by domestic ratings firms have seen the prices of their outstanding bonds plunge recently because their profitability has trailed the pace at which they've built up debt. But Beijing's strategy on debt also entails risk. Chief among the dangers is if a repricing of debt happens too quickly, inciting a chaotic unwinding that spills over as contagion into other markets. China needs more defaults, just not too many too quickly.  What We're ReadingAnd finally, a few others things that caught our attention: | 
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