Hopes for the 2013 California Summit

and are meeting today for the first time since the latter became China’s president. Reports say that the meetings, taking place June 7-8 at the Sunnylands estate near Palm Springs, California, will be unscripted and as casual as a summit between the leaders of the world’s two largest economies can be—a planning decision rumored to focus the summit more on developing personal rapport between Xi and Obama than on addressing issues of dispute. Despite the uncertain agenda that comes with such informality, recent concerns about alleged Chinese hacking and cyberespionage suggest that cybersecurity is a topic likely to be addressed by Barack Obama, whether or not his counterpart is prepared for a productive conversation. From the Economist:

XI JINPING’S first meeting with President Obama as head of state on June 7th is also the first such summit to feature prominently the issue of alleged Chinese cyber-attacks on American companies and interests. It has taken a long time for the issue to take centre stage in diplomatic relations between the two countries. After years of ineffectual and perhaps overly discreet grumbling about Chinese hacking, American officials are finally forcing the issue.

[…]Chinese officials have at least agreed to talk about the issue. John Kerry, the American secretary of state, said in Beijing in April that the two sides would establish a working group on cyber-security. But it will be hard for Americans to discuss hacking productively with their counterparts. China goes by what three American authors in a new book, “Chinese Industrial Espionage”, call a philosophy of “admit nothing and deny everything”.

Hacking has in the past six months moved to “the top of the list” for business executives’ meetings with Chinese officials, says James McGregor of APCO Worldwide, a consultancy. And also, it appears, for Mr Obama’s meeting with Mr Xi. Putting the issue at the top of Mr Xi’s list will apparently take more doing. [Source]

NBC News reports that campaign officials have recently acknowledged Chinese state-sponsored hacking against the 2008 presidential campaigns of Barack Obama and John McCain. The editors at Bloomberg compiled a list of issues where they view diplomatic progress as crucial to dispel what the Brookings Institute has labeled “strategic distrust.” is included, as well as:

North Korea: Xi has criticized Kim Jong Un’s nuclear antics, with China showing new willingness to enforce sanctions. Yet the U.S. and China see the future of the Korean peninsula very differently. What the two sides need is a sustained high-level dialogue about how they would respond to a humanitarian emergency, sudden collapse or other contingencies.

Regional tensions: China has become embroiled in territorial spats with many of its maritime neighbors. Without weighing in on individual claims, Obama needs to convey that the U.S. will stand by its treaty commitments to its allies. China, for its part, would be wise to focus on agreements to develop resources and settle disputes instead of lectures about sovereignty. The U.S. could help promote the success of that approach by — dare we repeat it — ratifying the Law of the Sea Convention, which provides a framework for resolving such disputes.

Economic relations: With China slowing and the U.S. growing, tensions are at a relative ebb. The yuan has appreciated by 10 percent since Obama took office, and the trade deficit with China has fallen. That could change if the U.S. economy’s demand for imports grows. Obama needs to avoid fanning protectionist flames. As recent U.S. solar tariffs on China show, such strategies are of dubious benefit. He also needs to stress to Xi that Chinese failure to live up to economic agreements will create a poor climate for more high-profile investments such as the $4.7 billion purchase of Smithfield Foods Inc. Xi, meanwhile, would benefit by prioritizing planned structural reforms that also improve market access for U.S. and other foreign companies. [Source]

Another article from the Economist looks at the many reasons for mutual anxiety in U.S.-China relations, and the need for cooperation to begin characterizing the “century’s most important bilateral relationship”:

There are plenty of good reasons for America to be nervous about the rise of a new economic giant and to be angry about cyber-attacks, obstructionism over Syria or the regime’s brutality towards its own citizens. There are also plenty of reasons for China to be annoyed with America: Americans have been too willing to demonise successful Chinese companies such as Huawei or CNOOC. But the lesson of history is that everybody loses if the world allows legitimate worries to get out of hand. More than 2,000 years ago Greece was torn apart by Sparta’s failure to manage the rise of Athens. A hundred years ago Europe was torn apart by its failure to manage the rise of Germany. If the 21st century is to be more peaceful than the 20th, America and China must learn to co-operate better. [Source]

In a New Yorker blogpost, John Cassidy further examines the 20th-century Germany/21st-century China analogy:

The analogy between twentieth-century Germany and twenty-first-century China isn’t perfect, of course, and neither is the comparison of the British Empire to Pax Americana. But the likenesses are close enough to be discomforting, especially as President Obama and Chinese President Xi Jinping meet for a two-day summit in Southern California that begins on Friday. (Evan Osnos has more on the summit.) Like Wilhemine Germany, China combines a vibrant economy with an authoritarian political system. Its culture has nationalistic elements, and, partly through the vigorous pursuit of economic relationships, it is expanding its influence around the world. [Source]

Accusations of financial fraud have long been hurled at Chinese firms listed on U.S. exchanges, and an unwillingness on the part of China’s financial regulators to assist the U.S. with probes seemed to have recently been breached with the signing of a memorandum last month. But, a U.S. senator isn’t convinced that the new memo goes far enough, and is pressing the Obama administration to raise the issue in California. From the Wall Street Journal:

Sen. Charles Schumer (D., N.Y.) in a letter sent Thursday to Treasury Secretary Jacob Lew urged the administration to “ensure this issue receives serious consideration” during an upcoming U.S.-China summit, slated to begin Friday.

In the letter, which was reviewed by The Wall Street Journal, Sen. Schumer said China should allow U.S. inspectors to examine Chinese auditing firms that audit companies trading on U.S. markets and should grant U.S. regulators access to audit information of China-based companies suspected of fraud.

Those moves are needed to protect U.S. investors, Mr. Schumer said. “It is in the interests of both U.S. financial markets and Chinese companies seeking to raise money here that investors know they can trust the financial statements of those companies,” he said in the letter. [Source]

Other U.S. lawmakers and activists are putting pressure on President Obama to bring up human rights issues at Sunnylands. Reuters reports:

U.S. lawmakers and 30 human rights groups on Thursday urged President Barack Obama to use a weekend summit with Chinese President Xi Jinping to press for the freedom of 16 prominent political and religious prisoners.

The “China 16″ include imprisoned Nobel Peace laureate Liu Xiaobo, rights lawyer Gao Zhisheng and political prisoners from the Tibetan and Uighur ethnic minorities, Christians and followers of the banned Falun Gong spiritual movement.

[…]The 30 rights groups include Amnesty International, Jubilee Campaign and the International Campaign for Tibet and are backed by Democratic and Republican lawmakers. They called on Obama to restore human rights as a central issue in U.S.-China relations – as it had been in the first two decades after diplomatic ties were established in 1979. [Source]

In what has been described as an “apparent goodwill gesture by Beijing,” China issued passports to relatives of Chinese activist Chen Guangcheng in the immediate lead-up to the summit.

While Isaac Stone Fish warns not to expect too much from the upcoming summit in a piece for Foreign Policy, the Global Times is expecting the meeting to be a “milestone” in Sino-U.S. ties. As we wait to see what transpires in the California desert, ChinaFile asked seasoned China-watching journalists and ambassadors to craft the joint Xi-Obama statement that would close out their ideal of this weekend’s summit (click through to read the four entries and vote on your favorite).

For prior posts and to see how the Sunnylands meeting unfolds, stay tuned to CDT’s coverage of the 2013 California Summit.