Xi Jinping meeting Prisoner Obama in 2012

Xi Jinping, now China’s president, visits the White House while serving as vice president in February 2012. Photo credit: Lan Hongguang, Xinhua

President Barack Obama will host President Xi Jinping at Sunnylands, the California estate of the late Walter and Leonore Annenberg, for two days of informal talks on June 7-8. It will be the first meeting between the two men since Obama won reelection in November last year and Xi was elected China’s president at the National People’s Congress in March. (Xi assumed the positions of Communist Party and Communist Party Military Commission chiefs in November 2012.) The talks will be wide-ranging and will set the tone and agenda for US-China relations for the remaining years of Obama’s second term.

The men will be accompanied by their respective foreign policy teams which have only just been fixed. For the United States, those present will include newly nominated head of the East Asia and Pacific Bureau Danny Russel, currently senior director for Asia in the National Security Council (NSC), and Evan Medeiros, the NSC director for Asia who will take over as senior director upon Russel’s departure. On the Chinese side attendees should include either State Counselor Yang Jiechi, who recently stepped down as foreign minister, or Ministry of Foreign Affairs Party Secretary Zhang Yesui, formerly China’s ambassador to the United Nations, as well as new Foreign Minister Wang Yi, Ambassador to the United States Cui Tiankai, and Assistant Minister responsible for American affairs Zheng Zeguang.

Buoyed by the Economy, Beset by Scandal

Obama comes into the talks buoyed by signs of a strengthening economy, but beset by three scandals: the handling of the terrorist attack on the Benghazi consulate on September 11, 2012; the surveillance of Associated Press reporters and other journalists; and, most damaging of all, the targeting of conservative political and religious groups by the Internal Revenue Service. The scandals are beginning to take a toll on Obama’s popularity. Rarely consulting Congress, he has few friends in either chamber. Prospects for the Democrats to retake control of the House of Representatives in 2014 have taken a hit.

The American economy is recovering from the worst recession since the Great Depression. Unemployment is dropping. Prices of homes are surging, as are applications for new building permits. The stock market’s three indices are hitting new records. Consumer confidence is also strengthening—retail sales grew for four straight months until hitting a snag in April—good news for China since the United States is the country’s largest export market. Inflation remains low. Perhaps the most striking development is the sharp reduction in the projected budget deficit. The Congressional Budget Office’s most recent estimate for the 2013 federal deficit is $642 billion, down 25 percent from what the office predicted in February.

By contrast, China’s economy is slowing. Manufacturing fell in May for the first time in five months. Exports are sluggish, reflecting weakness in European markets where Chinese products face increased tariffs. Inflation is quickening. The Shanghai Composite Index has gained just over one percent year-to-date. By contrast, the Dow Jones Industrial average has grown more than 14 percent. Slowing growth—along with worsening environmental pollution—is fueling rising social discontent, notably in export powerhouse Guangdong Province. Tensions are also on the rise in Hong Kong as debate heats up over how to implement universal suffrage in the 2017 election for chief executive.

Of special concern to Xi Jinping, and a top item on his agenda for the Sunnylands summit, is the drop in foreign direct investment. American firms are pulling out of China, or reducing investment plans, as they bring jobs back to the United States. China is no longer seen as a low-cost producer and barriers remain to investment in several key sectors. Foreign investors also have concerns about environmental pollution and alleged Chinese cyber hacking. A Chinese diplomat told an American businessman in May that the decline in US investments has resulted in a decline in American influence and “leverage.” Xi is also worried about barriers, chiefly on national security grounds, to Chinese investment in the United States. Scores of Chinese firms have delisted from American stock exchanges, unwilling or unable to meet regulatory standards.

Sizing up Xi Jinping

The contrast between the personalities of the two presidents is striking. Obama is aloof and professorial and does not make friends easily. In fact, he is said to have only one foreign leader as a close friend: Prime Minister Erdogan of Turkey. Xi is affable, self-confident, and, as described by a senior State Department official who has sat in on meetings with him, “charming.” Aside from a passion for basketball, Barack Obama and Xi Jinping have few common interests.

Secretary of State John Kerry meets with President Xi Jinping in Beijing in April.

Since Xi assumed the presidency in March, he has met Treasury Secretary Jack Lew, Secretary of State John Kerry, Chairman of the Joint Chiefs of Staff Martin Dempsey, and NSC Advisor Tom Donilon. Opinions on his leadership style have emerged. In contrast with Hu Jintao, Xi’s rule-by-consensus predecessor, Xi is seen as a strong man, intensely nationalistic and a true believer in communism. He rules by fiat and is said to regularly scrap the daily schedule drawn up by the General Office. Also unlike Hu, Xi has a firm grip on the military. He is enforcing unpopular edicts against lavish banquets—the norm is now “four dishes and one soup” with no alcohol—and ostentatious displays of wealth and privilege. Xi has put Standing Committee member Wang Qishan in charge of his signature anti-corruption campaign, determined to root out both “tigers” and “flies.”

Xi is seen as someone committed to economic reform, a Leninist in the “New Economic Program” mold. He is expected to unveil at Sunnylands initiatives to attract investment and loosen the grip of state-owned enterprises on the Chinese economy. Xi likes foreign businessmen. At the same time, he disdains foreign critics of China’s human rights. Political reform has disappeared from the political lexicon. Xi exhibits no tolerance for dissent, or for protest. His ill-defined “Chinese dream” has no place for minorities, who suffer from repression and discrimination. Every month Tibetans self-immolate and Xi sees no reason to adopt policies that might curb these horrific suicides. He sees clemency for political prisoners as a sign of weakness. Some American officials believe that Xi personally vetoed the release of the American geologist Xue Feng (薛峰), the only US citizen serving a sentence in China for endangering state security. As one American diplomat put it, “Hu was too weak. Xi is too strong. Take your pick.”

67percent of Americans see China’s influence as mainly negative

Public Opinion Sours

Feelings towards the United States among Chinese and towards China among Americans have turned sharply negative over the last year. Many Chinese think America is determined to thwart its rise and is backing rivals against Beijing’s territorial claims in the East China and South China seas. Americans see China as an adversary or, more commonly, a competitor. While the focus of their unhappiness is economic, more are seeing the rise of China’s military as a threat.

The deterioration in public opinion is underscored by a BBC pollundertaken in the US and China by GlobeScan/PIPA between late February and March 2013. Samples of 1,000 Chinese (all living in urban areas) and 1,018 Americans were asked whether the other country exerts a positive or negative influence in the world. Only one in five Chinese say America exerts a positive influence—the third-most negative attitude towards the United States after Pakistan and Turkey—down from 29 percent in 2012. Among Americans, a mere 23 percent see China’s influence as positive, versus 67 percent who see it as negative. This contrasts dramatically with a relatively even split (42 percent positive, 46 percent negative) in 2012. As bad as China’s numbers are in the United States, they are worse among key allies, reflecting a stunning failure of China’s efforts to exert soft power (see “China’s ‘Positive Influence,’” p. 5).

Barack Obama received a harsh Chinese report card in a Pew Research poll published in June 2012. The results reflect a sharp drop in confidence in his leadership and international policies. Just 38 percent of Chinese respondents expressed confidence in Obama’s leadership, compared with 62 percent in 2009, shortly after his election. Over the same period, approval for Obama’s international policies among Chinese sank 30 percentage points to 27 percent.

On the Agenda

As in past summits, there will be no shortage of issues on the table. Obama will raise allegations of Chinese hacking of American governmental and corporate websites and emails. A Pentagon report for the first time names China as the chief culprit behind a sharp up-tick in global cyber warfare, and a story in The Washington Post claims that Chinese hackers gained access to a database that included information on those suspected of committing espionage in the United States. China has fired back, claiming that it is a victim and calling the United States the “empire of hacking.” Obama’s hand has been weakened by revelations that his administration has been conducting surveillance of American journalists.

The North Korean nuclear crisis will be another priority. Despite some progress in getting China to put more pressure on the North, including closing the accounts of the reclusive state’s largest bank, American officials want Beijing to do more, noting that there has been virtually no impact on China’s trade with the Democratic People’s Republic. China will shoot back by pointing out that while it has refrained from sending an envoy to Pyongyang despite pleas from Kim Jong-un, Washington failed to stop its Japanese ally from sending a special envoy to the capital. Isao Iijima, the aide to Prime Minister Abe, spent four days in Pyongyang in mid-May. The day after his departure, North Korea rewarded Abe by firing three short-range missiles into the sea in the direction of Japan.

US failure to rein in Abe will enable Xi to raise the general topic of US-Japan relations. China thinks that the United States is keeping silent in the face of repeated Japanese provocations. Obama will be challenged to clearly state the US position regarding Chinese territorial assertions in the East China and South China seas.

As noted above, economic matters will likely be at the top of Xi Jinping’s agenda. He is expected to unveil elements of his package to reform the Chinese economy and lead it to a higher growth trajectory. A core element will be increasing Chinese domestic consumption, music to Obama’s ears. Xi is seeking to entice American firms to commit further billions to China, using the lure of the vast China market to counter heightened competition from lower cost countries like Myanmar (now tilting towards the United States), Cambodia, and Bangladesh. Obama will once again urge China to let its currency rise at a faster clip. Xi will point out that the yuan’s rate against the dollar is the highest in years, and will point out that a more expensive yuan will further hurt the competitiveness of Chinese exports.

Obama will note that as much as one-third of particulate pollution in California, where the meeting will take place, originates in China. He will urge stronger steps to bring down the alarming level of air pollution in Beijing and other urban centers. Xi will likely offer an olive branch by proposing the resumption of high-level climate talks; however, he will do so carefully. The failure of the Copenhagen Climate Summit is fresh in Obama’s mind.

And then there’s Human Rights

In no area of the relationship are views further apart than on human rights and rule of law. The countries have established two annual dialogues to discuss their differences: the Human Rights Dialogue and the Legal Experts Dialogue. Both are, in effect, suspended. In past years, one of the two dialogues took place prior to the Strategic and Economic Dialogue, which is scheduled this year for July 10-11. Despite efforts by the State Department to schedule the Legal Experts Dialogue, China’s Ministry of Foreign Affairs has declined to do so.

The proximate cause of China’s anger is the handling of the Chen Guangcheng (陈光诚) case. A year has passed since Chen and his wife and two children left China for what was supposed to be a year of study at New York University. While the State Department has trumpeted the success of the negotiations as a sign of maturity in the relationship, Chinese officials take a different view, seeing the handling of the case as an embarrassment to the Chinese government.

For the first few months of his sojourn, Chen struck a moderate tone. That changed as the blind, self-taught lawyer began receiving reports of his family’s mistreatment in his home province of Shandong. His nephew Chen Kegui (陈克贵) was sentenced to 39 months in prison in November 2012, shortly after Xi Jinping was elected party secretary. In May 2013 Chen’s brother was allegedly assaulted by thugs near the family’s village, in apparent retaliation for Chen Guangcheng’s announcement that he would visit Taiwan at the end of June. Chen testified to Congress, demanding that the State Department release details of the negotiations that led to his leaving China. He more recently visited Europe where he railed against human rights abuses perpetrated by the Chinese government. He even criticized the Norwegian government for allowing China to join the Artic Council as an observer.

As a result of his activism, Chen has become a focus of Beijing’s ire. The Ministry of Foreign Affairs spokesman warned Chen to choose his words carefully when he visits Taiwan. In private meetings with Americans, Chinese diplomats warn of “serious consequences” for any government or individual who provides financial support to Chen, who has negotiated a book deal and who is considering an offer to make a movie about his life.

Other individuals are likely to come up during the Sunnylands summit. They include the Nobel Peace Prize laureate Liu Xiaobo (刘晓波), now in the fifth year of his 11-year prison sentence, and his wife Liu Xia (刘霞), who remains confined to her apartment under tight police surveillance. A long list of issues that Barack Obama is expected to raise includes the slowing pace of legal reform (despite promises, reeducation through labor has yet to be eliminated), treatment of Tibetans and Uyghurs, and the one child per family policy. Xi, who once derided critics as well-fed foreigners with nothing better to do than point fingers at China, will push back strongly.

The Specter of Copenhagen

The Obama administration entered office with the goal of achieving a climate change treaty at the 2009 summit in Copenhagen. It adopted a “soft approach” towards China, toning down criticism of China’s human rights practices and even declining to make a submission to the Universal Periodic Review (UPR) of China’s human rights record held in Geneva in February 2009. (China’s next UPR will take place in October 2013.) By all accounts, the talks in Copenhagen were a disaster. Obama returned to Washington, angry and embarrassed. In late January he approved a $6 billion arms sale to Taiwan, and Secretary of State Clinton followed up with a scathing speech decrying China’s policy towards the Internet. Since his November 2009 visit to Beijing, Barack Obama has shown little interest in visiting China.

With all these factors at play, it makes sense to lower expectations for the Sunnylands summit. The leaders should avoid lofty rhetoric about the “special relationship” Secretary Kerry called for during his April visit to Beijing. Instead the two leaders should work on developing mutual trust, something sorely lacking in US-China relations, and focus their energy on achieving tangible agreements in order to resolve the numerous disputes that currently plague the relationship. ■

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