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How to Gauge U.S.-China Talks

Interviewee: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies, CFR
Interviewer: Bernard Gwertzman, Consulting Editor, CFR
January 20, 2011

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The state visit of Chinese President Hu Jintao that concluded today was a success for the Obama administration, which staked out a strong position on human rights and created forward momentum on trade and investment, says CFR China expert Elizabeth Economy. On other fronts, including the debate over China's currency, the visit scored no breakthroughs, though none was expected, says Economy. The White House gets high marks for "laying out a rationale for China to reform its human rights policy," though Hu's acknowledgment (NYT) in a press conference that "a lot still needs to be done in China in terms of human rights" does not "represent a shift" says Economy. Nor has there been a shift on North Korea, she says, though she notes that a debate is going on within China about whether the country should work more closely with the United States, Japan, and South Korea on Korean peninsula issues.

There was more than the usual buildup to the state visit between the leaders of the United States and China. The official part of the state visit between President Obama and President Hu ended with a joint press conference and a joint statement. What was your impression?

The Obama administration accomplished exactly what it set out to do: stake out its positions on a wide range of issues in the U.S.-China relationship, appear strong on concerns such as human rights, bring a little forward momentum to the relationship, and get a few deliverables (on the trade and investment front) in the process.

On the currency issue, President Hu gave nothing, but no one should have expected a breakthrough. China will move in its own way on the issue, according to what it perceives as its own economic interests.

There was considerable discussion about the currency issues that have dogged relations for some time. Was anything accomplished to assuage U.S. concerns about the yuan being undervalued?

On the currency issue, President Hu gave nothing, but no one should have expected a breakthrough. China will move in its own way on the issue, according to what it perceives as its own economic interests. President Hu pretty clearly indicated in advance of the state visit that he did not view strengthening the currency as essential to addressing China's inflation problem.

President Obama seemed pleased by the new deals announced during the visit, although they most likely were worked out months ago and only announced here. Anything significant in them?

It is difficult to parse out what is truly significant from what is not in the trade and investment deals that were announced. How many jobs are truly dependent on these new deals? Are we at risk of simply getting a short-term gain from providing advanced technology that will then be pilfered by Chinese competitors or simply captured by Chinese partners? How long will Boeing have jobs in the United States if it is sharing technology and establishing manufacturing plants in China? At some level, we have to trust that the U.S. CEOs have a long-term vision for doing business and making money in China, but my guess is that we are in a tough race to stay ahead on the innovation curve in order to keep our China business five to ten years out.

Human rights issues were on the agenda, highlighted by the highly negative reaction of China to the Nobel Peace Prize award last year to imprisoned Chinese dissident Liu Xiaobo. President Hu apparently surprised some by saying at the press conference that China has more to do in the human rights field. How important is this issue to relations between the two countries?

Human rights are critical to the ability of the U.S-China relationship to grow and prosper over the long term. Between Secretary of State Hillary Clinton's and President Obama's statements on human rights, the White House did a terrific job of laying out the rationale for China to reform its human rights policy--both to enable China to continue to grow in a peaceful and stable manner and to ensure that China will be a constructive partner for the rest of the world in adhering to global norms and establishing new ones. President Hu has shown virtually no inclination to advance human rights during his eight-year tenure, and his comments during this visit didn't represent a shift. We can only hope now that he finds religion on the issue or at least wants to leave a dramatically different legacy.

The joint statement pointedly called for denuclearization of the Korean peninsula and criticized North Korea's uranium enrichment program. It also seemed to call for a resumption of the Six Party Talks, although South Korea and the United States seem to want North Korea to apologize first for its military actions last year against South Korea. Anything new in this?

There was no evidence of a substantive shift in the approaches of the United States and China on the issue of North Korea. There is an interesting debate ongoing within China about the need for China to work more closely with the United States, South Korea, and Japan and not simply reflexively defend North Korea. It will be interesting to see whether this view takes hold. At the same time, the Chinese army is reportedly going to station troops in North Korea to protect its economic assets and civilians. From what they are being protected it is not clear.

On the seeming tensions in the region between China and its neighbors over territorial issues and China's military buildup, the joint statement talked about improving military-to-military relations and noted that China's top military man would be visiting the United States this year. Does this indicate any easing of tensions?

The military-to-military relationship will be a tough nut to crack. Despite the nice rhetoric, some within China's top military have openly expressed little interest in deepening and broadening military ties with the United States. Even if they are forced to meet with their U.S. counterparts, they can make it relatively unproductive.

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