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A Summit That Won’t Be Business As Usual: Obama, Hu Meet In Washington

  • Christian Caryl

Both sides seem keenly aware of the high stakes involved.

Both sides seem keenly aware of the high stakes involved.

WASHINGTON -- A meeting of the heads of the world’s two biggest economies would make headlines under any conditions. But this time around the discussions between Chinese President Hu Jintao and his U.S. counterpart, Barack Obama, are more fraught than usual.

Hu has arrived for a four-day state visit to the United States that is being billed as the most important trip by a Chinese leader to the United States in 30 years. Hu and his entourage will be feted with all the pomp and ceremony that accompanies such a tour, including a lavish state dinner at the White House on January 19.

But behind the scenes, there are plenty of thorny issues to discuss.

Last year, China’s economy surpassed Japan’s as the world’s second-largest, an achievement that has clearly boosted Beijing’s determination to shape the global balance of power. The United States, meanwhile, continues to struggle with the fallout from three years of economic slump and corresponding perceptions of its weakened role in world affairs. Relations between the two have suffered accordingly.

“I believe, and many other people believe, that this is going to be an incredibly important summit between the two presidents," says David Finkelstein, a China analyst at the Center of Naval Analyses in Washington. "And I say that it’s going to be an important summit because we just had year and a half of very rocky relations between the U.S. and China.”

'Critical Juncture'

Both sides seem keenly aware of the high stakes involved. In remarks published on January 17, Hu acknowledged that “the strategic significance and global impact of China-U.S. relations have been on the rise.” In a speech held a few days earlier, U.S. Secretary of State Hillary Clinton spoke of a potential turning point in the relationship between the two countries.

"America and China have arrived at a critical juncture," she said, "a time when the choices we make, both big and small, will shape the trajectory of this relationship. And over the past two years in the Obama administration, we have created the opportunity for deeper, broader, and more sustained cooperation."

U.S. President Barack Obama (left) last met Chinese President Hu Jintao on the sidelines of the G20 summit in Seoul on November 11.

The two presidents will certainly have a lot to talk about, but their conversation is likely to focus on money. China’s economy has continued to steam ahead during the global economic crisis even while the United States – along with other Western countries – has faced sagging growth and stubbornly high levels of unemployment.

At around $252 billion, America’s trade deficit with China remains huge. U.S. politicians are increasingly inclined to blame that on China’s management of its currency, which, they say, Beijing maintains at an artificially low exchange rate in order to make its own exports competitive. Though the Chinese insist that they have allowed the renminbi to rise over the past six months or so, the Americans respond that the amount involved -- about 3 percent -- hasn’t been enough to make much of a difference.

U.S. Treasury Secretary Timothy Geithner repeated that critique of Chinese exchange rate policy in a recent speech that laid out American views in advance of the summit.

"We believe it is in China's interest to allow the currency to appreciate more rapidly in response to market forces,” Geithner said. “And we believe China will do so because the alternative will be too costly -- both for China and China's relationship with the rest of the world.”

'Don't Fear' A Growing China

Geithner also assailed the Chinese for unfair subsidy practices, such as cheap loans given to companies by state-run banks, and for failing to do more to protect intellectual property rights. Those concerns are increasingly voiced by U.S. and other foreign investors in the Chinese market, and ones which Obama is sure to bring up in his meetings with Hu.

The Chinese, meanwhile, accuse the Americans of trying to boost their own economy through stimulus spending rather than measures to increase productivity. Senior Chinese officials have been expressing concerns that America’s yawning budget deficits threaten the value of China’s vast holdings of U.S. Treasury bonds and other securities – holdings that have helped Beijing’s foreign exchange reserves to swell to more than $2.8 trillion, a sum that now amounts to more than the reserves of all other countries combined.

The Chinese also complain that their own efforts at foreign direct investment in the U.S. economy – and especially in sensitive high-technology companies – are being unfairly blocked by the Americans.

In a commentary published in advance of the summit in the "Financial Times," Chinese Vice Premier Li Keqiang -- under the revealing headline “The World Should Not Fear A Growing China” -- made a point of stressing the volume of China’s imports and the contribution that Chinese investment has made to propping up global growth.

'Core National Interest'

For all the centrality of economic issues, though, there will be plenty of other topics on the agenda, too.

The United States and its Asian allies are especially worried about signs of Beijing’s increasing assertiveness in promoting its interests in East and South Asia.

Last year, Chinese officials declared that their country would henceforth regard its territorial claims to disputed islands in the South China Sea as a “core national interest.” That surprise move fueled regional nervousness and prompted a U.S. offer to act as an arbiter in any conflicts – a gesture that was then taken by the Chinese as fresh evidence of Washington’s determination to meddle in Beijing’s backyard. A confrontation between a Chinese fishing boat and Japanese Coast Guard ships around a set of Japanese-controlled islands that Beijing also counts as its own sparked additional tensions.

An aircraft that is reported to be the new Chinese stealth fighter in Chengdu, Sichuan Province, on January 7.
The United States and its allies also cite the dramatic growth in China’s defense spending, which now ranks second only to America’s, as well as Beijing’s development of new state-of-the-art weaponry – including the debut of a stealth fighter that coincided with U.S. Defense Secretary Robert Gates’s recent visit to China – that appears to be aimed at challenging U.S. military dominance in the Pacific region.

The Chinese respond that their own spending lags far behind that of the Pentagon, and that they continue to push for a more balanced “multipolar” world in which not only the United States and its allies will call the shots. Hu can be expected to assert Beijing’s displeasure with the most recent round of U.S. arms sales to Taiwan and with naval maneuvers staged by Washington and its allies in Pacific waters close to Chinese shores.

Speaking in Beijing, Chinese Foreign Ministry spokesman Hong Lei emphasized that China wants the United States to treat it as an equal and respect Beijing's concerns.

"We hope this visit will encourage the two sides to see each other in an objective and rational way, to respect each other's choices along the road to development, and stick to mutually beneficial and collaborative development," Hong said. "Also, we hope both sides will respect each other's sovereignty and territorial integrity and development interests and properly deal with each other's main concerns."

Climate Change Looms Large

Another issue that will loom large on the agenda is climate change. On this front, the Chinese remain resistant to American demands that could be construed as compromising their own economic development – a touchiness embodied by the Chinese official who gave Obama a tongue-lashing at the Copenhagen summit on global warming in December 2009. The outcome at the more recent Cancun climate change conference, where both China and the U.S. made a conspicuous effort to smooth over their differences on greenhouse gas reduction targets, suggests that this might be one area where the two countries might be making progress.

The chairman of the Nobel Committee, Thorbjoern Jagland, looks down at the vacant chair of Nobel Laureate Liu Xiaobo (portrait at left) during the Nobel ceremony on December 10.
That’s unlikely to be the case when it comes to human rights, however. China’s ruling Communist Party greeted the award of last year’s Nobel Peace Prize to dissident Liu Xiaobo with a series of harsh countermeasures aimed at critics of the party’s continued rule. In the past, Chinese leaders sometimes released imprisoned dissidents to improve the atmosphere prior to high-profile meetings with the Americans; this time around, though, such goodwill gestures are conspicuously absent.

June Teufel Dreyer, a China scholar at the University of Miami, says that the favorable economic situation at home makes Hu less likely to compromise.

"The economy is growing, so there are more jobs to be created for people,” she says. “That will take the edge off a lot of the discontent. Mr. Hu doesn’t have life easy. There are still a lot of restive minorities. There are still a lot of dissidents willing to go to jail. But meanwhile he can afford to play hardball with any non-Chinese country and you’ve seen him playing hardball."

And then there’s North Korea. Tensions on the peninsula have spiked in recent months following North Korea’s shelling of a South Korean island and the sinking of a South Korean ship that Seoul has also blamed on the government in Pyongyang. Lately, though, experts say that there are signs that China has been pushing its ally Kim Jong Il back to the negotiating table – an effort that is certain to be welcomed by Obama.

Yet some experts warn that the summit is unlikely to yield any dramatic payoffs. For one thing, both presidents face such complicated political environments at home that they may be cautious about making grand concessions.

Common Cause

Thomas Fingar, a former U.S. diplomat who now teaches at Stanford University, hopes that won’t get in the way.

“There’s maneuvering going on in China in my view leading up to the leadership transition that will come in 2012," he says. "That makes it more politically charged on the China side. And our own political situation is so highly charged.”

Even so, he hopes that the two presidents can still find some sort of common cause.

“We absolutely need one another on a great many issues. It’s hard to think of an issue of any importance in the global system that doesn’t require U.S.-China cooperation to solve in some ways or to ameliorate,” Fingar says.

And that, of course, is presumably why the world will be giving this particular summit its undivided attention.

Christian Caryl is the chief Washington editor for RFE/RL

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