Obama and Xi forge a way out

2013-06-11Asia Times

BEIJING - Openings over the environment, closer collaboration on North Korea, and no mention of the prickly issue of human rights: at the weekend summit between US President Barack Obama and his Chinese counterpart Xi Jinping, the US seemed to pick up where ties got derailed - that is, in Copenhagen in December 2009, when Obama and then prime minister Wen Jiabao failed to reach an agreement on the environment. Xi reciprocated by demanding respect for the new status of his country and reopening the sensitive and important military dialogue.

Sure enough, the two great powers did not come to any precise agreements. But the most important development was that the two heads of state managed to talk openly and in a freewheeling manner for some eight hours. That is the longest free discussion between American and Chinese leaders since Richard Nixon and Henry Kissinger chatted away with Mao Zedong and Zhou Enlai in 1972 for 17 hours.

The meeting of Obama and Xi was the first such outside of the usual diplomatic trappings for many years - even Deng Xiaoping did not engage in the sort of free-flowing discussion that on the Chinese side is considered a way to revamp bilateral ties in the most powerful manner since Mao's times. The location was no accident, either: California, the part of America projecting into the Pacific Ocean, but still in America and not China, the location of Nixon and Mao's meeting.

In a way, US-China ties seem to be back to where Obama left them in 2009, when America was deep in financial crisis and China had just emerged as a real challenger to the US as a global power. However, the past four years didn't pass in vain. America launched its policy of a "pivot to Asia" - actually a "pivot to China" - which by all practical accounts encouraged many of China's neighbors to express their tensions with Beijing (or if you wish, to not back down to Beijing's encroaching presence), and thus making the international atmosphere around the growing giant almost suffocating.

Then, in this light, the summit is very different from those of the past. China is looking for a new "great powers relationship", and, de facto, Obama has offered a grand framework that both reassures the hawks at home and paves a new way ahead. He has surrounded China and set de facto siege to it with the pivot to Asia without even being on the frontline but rather by letting some of its eager allies go ahead. On the other hand, like all good strategists, Obama has offered China a way out: the collaboration sketched out at the weekend.

Without a way out, sieges can have unexpected results. A cornered enemy fighting desperately for his life could break through the siege and turn the battle around - or die out while killing as many enemies as possible. That happened before World War I, when Great Britain surrounded Germany with a series of alliances that isolated Berlin, leaving it no way out except a humiliating surrender or a nasty war.

The result was that Germany, feeling cornered and a without way out while also fearing surrender and buoyed by a string of victories - the last being in 1871 against France, once the great power of continental Europe - went to war to break the siege. The end result was the defeat of Germany, but the fight was so bitter that it also wrecked the British Empire. The Obama-Xi summit should then be the beginning of a way out of the siege for China, but also a way for America to avert a potential risky and very costly confrontation.

The proof of the changing relationship will come with a new agreement on the environment, something close to Obama's green heart; but also, more practically with an agreement on North Korea, where Beijing has promised tighter enforcement of UN sanctions. This, and Beijing's leaning on Pyongyang, should bring North Korea back to the negotiating table about dismantling its nuclear capabilities.

Collaborating on a common goal is extremely important and brings the two nations together. However, this will not suffice to convince the common people in America, the ones who cast their votes in the ballot boxes, that China is trustworthy.

Decades of propaganda against communism, a system that turns men into machines, and the subtle yet deep prejudice against the wily and devious Chinese create suspicion about Xi and his fellows in the Chinese government. The Chinese in American pop culture for many years have been the hyper-educated, mean, and totally cynical Fu Manchu or the loyal yet sketchy and broken English-speaking detective Charlie Chan. Beijing's leaders are both communist and Chinese, so how can the American people trust them?

Moreover, strategic collaboration is fine, but the financial crisis fractured the basis of common interest that bound the two countries together for almost 20 years. During that time, the US invested in China, China improved its technologies and exported goods to the US, and China used part of its earnings to buy US Treasury bonds. However, China's growth led to a devaluation of its dollar assets, thanks to the revaluation of the yuan, and the US financial crisis destroyed hundred of billions in Chinese financial assets.

China then cannot go on buying bonds ready to be burned or dumped in the next trade row or economic crisis. The two countries need a more solid economic grand bargain. Bill Mundell (see Accentuate the positive (, Asia Times Online, June 6, 2013) explained the necessity of turning Chinese financial investments into stakes in American infrastructure. The US needs to rebuild its infrastructure, which is putting a huge brake on its development; and China needs to hedge its US investments from inflation or devaluation. Then a part of the trillions of dollars of Chinese foreign reserves could be turned into minority stakes in US infrastructure.

In this case, the rise of China would not hamper the incumbent power, the US, but would prop it up and help its redevelopment. Then, for the first time in history, two powers could develop together, and actually the development of China could help in the redevelopment of America.

The idea may be sound, but many issues have to be addressed, both on the investment side and on the side of perception, making the Americans can get over their deep-seated fear of the communist Chinese. Moreover, the world is not made only of America and China. Everybody knows that a rapprochement of the two giants could squeeze the rest of the world, starting with the Asian countries, which were so prompt to line up against an expanding China.

Their interests and positions need to be addressed rapidly, especially by China, which in no way should be perceived as taking advantage of its newly improved ties with Washington to bully its neighbors or forget its wider agenda. If Beijing does not act quickly enough, the combined pressure on Washington by countries and governments far and near could push the US down the road of harsher dealings with Beijing. This means a lot of work and rethinking in Beijing, and it means that to work, these new ties need much more than an eight-hour informal meeting. (2013-06-11 Asia Times)


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