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The Stalemate Summit

Author: Leslie H. Gelb, President Emeritus and Board Senior Fellow
January 19, 2011
The Daily Beast

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This U.S.-China summit was a test of the balance of power between the two superpowers. President Barack Obama and President Hu Jintao were well aware of the summit stakes. Obama's strategy was to push as hard as he could, and he did. He needed Chinese concessions for a successful summit. Hu's strategy was to resist as hard as he could, and he did, because all he wanted was a summit that did not fail. The Chinese side won this test of wills and power for two reasons. First, they had the easier bargaining position: All they had to do was hold the line, while Washington had to gain concessions. Second, Hu was in a far stronger position overall because China's economy continues to grow in double digits, while the American economy remains troubled.

Obama fought the good fight and pushed—unlike the passive posture he adopted a year ago in Beijing. But he had to get concrete concessions from Hu to register a success, while all Hu had to do was smile without giving in and make sure that mutual relations didn't deteriorate. Last weekend, some members of the Obama team even considered taking desperate measures. Specifically, they were contemplating either simply dropping the joint communiqué at the end of the summit or canceling the state dinner, according to administration officials. Their thinking was that Hu couldn't possibly afford to let the whole summit fail, while Obama's toughness would look good politically. Fortunately, they dropped both ideas.

For Obama, it was precisely the right time to start undoing Beijing's grossly unfair economic practices. But all the Obama team managed to extract from the visitors was about $45 billion in new contracts to buy American goods and services, particularly civilian airliners from Boeing. Most of these deals had been in the pipeline well before the summit. On the really key economic issues, Hu essentially avoided showdowns and compromises and sounded reassuring. These make-or-break items included China's unfair currency manipulation to gain price advantages on exports, its stealing U.S. intellectual property to make U.S. goods without paying for them, and its placing high and illegal hurdles in the path of American companies trying to do business in the Middle Kingdom.

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